What do you do if you want to pay your neighbourhood grocer or your autorickshaw driver? Bank ATMs continue to dispense mostly Rs 2,000 notes, one year since demonetisation, making it hard to get change for the pink note.
Vegetable vendors, auto drivers and small grocers seem to be the worst hit among city dwellers struggling for change. Bad mornings, they say, have become routine as either they or the customer tends to compromise or work on credit for lack of change.
So, why is it still difficult for the common man to get their hands on Rs 100 and Rs 500 notes even after one year of demonetisation? Darryl Sequeira, Bank Service Operations Manager at Yes Bank in Mumbai reveals, “There is no deficit of notes in the ATMs. But most banks prefer to load more of Rs 2,000 notes into ATMs so that they can cater to a larger number of people and dispense more money."
Confirming Sequeira’s revelations, a General Manager of Shamrao Vithal Cooperative (SVC) Bank Limited who does not wish to be named, said, “The bank’s main priority is to service more customers, and if there are more lower denomination notes, fewer people will get money (before the ATMs run out).” The math works this way. An ATM can dispense only 40 notes at a time. So, if you want to withdraw Rs 4,000 at the ATM, it can either dispense the amount as just two notes of Rs 2,000 each, or eight notes Rs 500 each or 40 notes of Rs 100 each (or a combination of denominations). So banks would rather fill up the ATMs with larger numbers of Rs 2000 notes than smaller denomination notes, as they can save time, money and manpower on refilling the ATM cassettes often.
The senior SVC bank official goes on to say that the number of transactions has gone up, and therefore the demand for lower denomination notes too, leading to scarcity. Whether this is because of demand naturally created by the need to provide change for the ubiquitous pink Rs 2,000 notes or whether it is because people are going back to using more cash than digital banking is unclear.
The dearth of Rs 500 and Rs 100 notes at ATMs could also be blamed on the logistics and schedules involved in re-filling of cash. "The availability of change also depends on the type of ATMs that customers are trying to withdraw from," says Sequeira. In a busy location, the ATM’s cash cassettes would have to be refilled twice a day; in less busy areas, they are filled only twice a week, while remote areas could be neglected while banks are busy focusing on keeping ATMs in areas of high transactions cash rich.
Inas, a Mumbai-based software developer for ATMs, who prefers to be known by a single name, sheds light on the back-end working of ATMs. “There are mainly two kinds of ATMs being used by banks - Indian and Japanese; most banks these days prefer the latter because they are known to better service customers. The availability of change also depends on whether the ATM is old or new because most old ones have two cassettes, while the newer ones have three cassettes,” he said.
The cassettes are used to place notes in the ATM, the amount of which is set by the bank through a software.
“Most banks use a combination of Rs 2,000 and Rs 500, or Rs 2,000 and Rs 100, thus creating a deficit for the third denomination, leading to the lack of necessary notes for customers in times of need,” said Inas.
Financial Software & Systems (FSS), a Chennai-based company that uses Base24, financial transactions managing software, does the back-end work with regard to ATM management. The software is maintained by project managers of the FSS and the ATMs are monitored by an FSS team that makes sure no machine runs out of cash. Once the number of notes have decreased to the last hundred, the team notifies the bank who then sends out their cash vans. And most banks have only two cash vans that cover an area with many ATMs depending on how big the branch is, says Inas.
Sacheth AS, a Mechanical engineer, one among thousands who have faced the pink note challenge say in and day out lets out his frustration. “It is impossible to get change at ATMs even after one year. I try all the machines but none of them seems to have Rs 100 and Rs 500, making it difficult for me to get change of Rs 50 and Rs 100 unless I go to a local supermarket. I have been successful in getting change at HDFC ATMs but that too is not always guaranteed," he says.
Local shopkeepers, tea shops and roadside food vendors on the other hand, have devised an easier though troublesome solution to deal with the situation using the earliest concept of ‘udhaar’ for convenience. They allow regular customers to buy on credit till the bill reaches a significant amount or mostly let them pay at the end of the month. However, the lack of ready cash at their disposal makes it difficult for them to make the purchases needed to sell their wares.
Demonetisation has certainly made the simple task of transacting through cash tougher than before.