Demonetization anniversary: No-cash ATMs persist due to insufficient supply; physical cash usage still remains high

A year after demonetization, long queues outside ATMs are rarely seen but no-cash ATMs still persist.

The currency in circulation is now at Rs 15,511.9 billion, less than the Rs 17,449.2 billion that was in circulation during the same time last year. While the cash pipeline needs more supply, banks have learnt to distribute it evenly among the branches and ATMs so that there are no queues. The shortage of cash, however, remains as physical usage of it remains high.

Rajnish Kumar, Chairman, State Bank of India, told DNA: "We have sufficient cash and it is distributed in all our branches and ATMs based on the need."

However, some of the smaller banks say that cash is insufficient to distribute it across all its centres. "Cash shortage is still persistent. It is still an issue in the rural areas," a senior official with a south-based bank said.

"The cost of funds of banks have come down at least by 2-3 per cent and digital payments have seen a sharp rise," Kumar added.

Figures, however, show that electronic transactions have not seen a persistent rise. After demonetization, the value of electronic transactions hit a high of Rs 149 lakh crore in March 2017, which was Rs 94 lakh crore more than its prior days. But the initial euphoria has settled down and digital payments have fallen. Despite the expansion of the infrastructure, it slid in October to Rs 99 lakh crore.

"There has been a large formalisation of financial savings and increase in the flow to mutual funds and insurance space," Chanda Kochhar, Managing Director and Chief Executive Director of ICIC Bank, said on Monday.