Printing of Rs 500 notes up, crisis ebbing, says govt

Darnell Taylor
April 19, 2018

ATMs in cities of Uttar Pradesh, Bihar, Andhra Pradesh, Maharashtra and poll-bound Karnataka were either not operating or showed no cash signs, reminiscent of post demonetisation scene.

State Bank of India sources said that they had received orders from the corporate office to see that ATMs do not go empty and to replenish cash into them even on Wednesday, although it was a holiday.

Given the official figure of Rs 18 lakh crore worth of currency being in circulation, which is equal to the pre-demonetisation level, and the increased digital transactions, it is surprising that the country is in the grip of cash crunch. "The temporary shortage caused by "sudden and unusual increase" (in demand) in some areas is being tackled quickly", Mr Jaitley said in a tweet". This has also become a contributing factor in triggering shortage.

The Cash Management Committee, comprising 10 banks, called an emergency meeting to take stock of the situation in Telangana, which had reported over 48% dry ATMs on Tuesday. "There are more than 230,000 ATMs operational all over India, each with four cassettes to store the cash in denominations of Rs 2,000, Rs 500, Rs 100 and Rs 50". "There are 19,000 ATMs in the state and strict directives have been issued to ensure availability of cash in them".

"I believe there is cash in more than 80 percent of the ATMs in the country".

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Regional manager of SBI in Dhanbad Bimlendu Vikas said they were diverting most cash to ATMs instead of making payment through bank counters.

"Trust in the banking system has hit an all-time low", said Mr Kranthi Bathini, director of Mumbai-based financial advisory company WealthMills Securities, who tried about 15 cash machines across 250km of a highway while travelling in the southern state of Andhra Pradesh last month, but all were dry. "This may have altered the demand for smaller denomination notes in a larger way to possibly substitute for currency of larger denominations", it said.

"During demonetisation, the banks, cash logistics industry, managed service providers and the Reserve Bank of India worked together to ramp up the re-calibration of ATMs to fit new notes. With this, in a month RBI will be printing about Rs 70,000-Rs 75,000 crore".

While it is hard to trace any specific reason for such massive cash withdrawals this year, analysts say that concerns over the health of India's banking system has also led savers to withdraw cash. "We are constantly monitoring the situation and making huge efforts to ensure the supply of currency in abundance at all our ATMs", Neeraj Vyas, DMD (chief operating officer) of SBI, said in a statement on Wednesday. One report notes the cash in circulation to GDP ratio stood at 11.6 per cent, and has now declined to 10.7 per cent.

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