Cash crunch in India: The reported shortage of cash and notes in a few states has led to the rise of several questions. Bankers have said there was delay in calibrating Automated Teller Machines (ATMs) even as they allayed fears saying situation is limping back to normalcy
Cash crunch in India: The reported shortage of cash and notes in a few states has led to the rise of several questions. Bankers have said there was delay in calibrating Automated Teller Machines (ATMs) even as they allayed fears saying situation is limping back to normalcy, according to The Indian Express report. The officials said there has been a rise on the frequency and the ticket size of transactions at ATMs in the first three months of calendar year 2018. They pointed out that a decline in “cash velocity” in those states has led to “an artificial shortage of cash”, the report says.
Officials of firms that manage services across 2.21 lakh ATMs in the country have said that re-calibration of ATMs to fit Rs 200 notes has been slow due to inadequate supply of these newly introduced notes. However, they claimed that the situation has improved since Tuesday.
“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. But now the decision to re-calibrate the ATMs to fit the Rs 200 notes lies with banks. And the banks are re-calibrating the ATMs only if they are sure of adequate supply of these notes otherwise they run a risk of having empty cassettes in ATMs. As a result the re-calibration of the ATMs has not been completed even after three months of introducing it in the system,” said Navroz Dastur, managing director, NCR Corporation, India & South Asia, a leading ATM service provider.
President of Cash Logistics Association of India Rituraj Sinha said that the cash logistics industry is working with banks and has increased the frequency of replenishment of ATMs in certain regions of the country that are facing a shortage.
Meanwhile, a State Bank of India (SBI) report has estimated the shortfall at Rs 70,000 crore — a third of the monthly ATM withdrawals. It has stated that declining income velocity indicates that the Rs 2,000 note isn’t getting adequately circulated in the economy. “Though the state-wise/ region-wise income velocity is hard to determine, yet our internal estimates suggest that in the states like Bihar, Gujarat and Southern States, the income velocity is far less than the national average. The other states have also started facing issues as there has been a ‘domino effect’ whereby any possible tendency to hoard cash may have spread to other States,” it said.