MUMBAI / NEW DELHI: Reviving the spectre of demonetisation, many parts of India on Tuesday reported acute shortage of cash at ATMs. Coming barely a month after RBI data said currency in circulation crossed pre-demonetisation levels and days ahead of the Karnataka elections, Opposition parties lost no time in attacking the government saying it’s a byproduct of the 2016 note ban.
While Andhra Pradesh and Telangana have been witnessing cash crunch for the past few weeks, the situation has escalated pan-India with Delhi NCR, Uttar Pradesh and even Bihar reporting empty ATMs.
Economic Affairs Secretary Subhash Garg said there has been a sharp uptick in cash demand to the tune of Rs 45,000 crore in just 13 days of this month, which is more than double the usual monthly cash absorption of Rs 20,000 crore. Demand has been rising in the past couple of months, he added. While the government did not offer any explanation as to why large volume of cash was being withdrawn, sources pointed to the practice of political parties stocking cash ahead of elections. Karnataka polls are due early next month.
On Tuesday evening, RBI released a statement saying the central bank has sufficient cash in its vaults and currency chests.
“Nevertheless, printing of the notes has been ramped up in all the four note presses,” it said. According to RBI, the shortage is limited to “some pockets” due to “logistical issues of replenishing ATMs frequently”. It said the current shortage would be addressed by moving currency to areas that are witnessing “unusually large cash withdrawals”.
Garg offered another explanation for the currency shortage -- lesser inflow of Rs2,000 notes back into the system.
“There is no cash crunch in the country. There’s around `18 lakh crore worth of currency supply now, which is close to the circulation during the demonetisation period. We keep Rs 2.5-3 lakh crore more currency in stock for excess demand,” he added. Finance Minister Arun Jaitely stepped in with his ‘Trust us, there’s no cash shortage,’ tweet to soften public ire, but an estimated 10-12 per cent of the total two lakh ATMs are running dry. Banking Secretary Rajiv Kumar said things would improve in a week.
The government has also ramped up printing of Rs 500 notes five-fold – from Rs 500 crore worth of notes a day to Rs 2,500 crore. That adds up to Rs 75,000 crore worth of notes in a month. For now, according to Garg, the government has Rs 1.75 lakh crore worth of currency in the reserve. “We can deal with a situation where the demand for cash in the country doubles from current levels,” he added.
According to junior finance minister S P Shukla, the government formed a state-wise committee while RBI formed another one to transfer currency from one state to another. As per RBI data, currency in circulation stood at Rs 18.4 lakh crore as on April 6. The unusual spurt in demand for currency in the last three months came from Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar. ATMs are also running dry in Delhi, Varanasi, Vadodara and Patna.
Withdrawal symptoms
The New Indian Express keeps its ear to the ground to understand the how’s and why’s of cash scarcity
Telangana
ATMs across the state have gone dry though RBI sent in almost double the amount that was sucked out after demonetisation. Around Rs 70,000 crore worth of Rs 500 and Rs 1,000 notes were withdrawn in the state post-demon. RBI has sent H1.4 lakh crore worth currency to Telangana so far in several instalments. According to finance department officials, money withdrawn from banks is not coming back into the system as deposits in adequate volume. For every H100 withdrawn from banks, normally 60 per cent gets deposited. That figure is now down to 20 per cent in Telangana.
Andhra Pradesh
Of the estimated 7,000 ATMs in the state, about 1,000 are running dry. As a result, about 40 per cent of financial transactions at ATMs have come down. Most ATMs in Visakhapatnam, Srikakulam, Vizianagaram, Krishna, Guntur, Kurnool, Anantapur, and Chittoor districts are running out of cash. “Circulation of cash has slowed in the past few weeks and the situation has not improved. For unknown reasons, people are not depositing money with banks. Their focus is only on withdrawals,” said a senior banker. “We are seeding the ATMs regularly, but the cash is getting completely withdrawn in just four hours,” said Venkateswara Swamy, Andhra Bank zonal manager in Vijayawada.
Delhi
People seen crowding the few working ATMs. “I went to three ATMs in Bengali Market. No luck. Ditto ATMs at Bhagwan Dass Road,” said Savita Singh, an IT professional
Karnataka
Several cities have been facing cash crunch for the past few days and according to bank officials, the situation won’t improve anytime soon. In Hubbali, most ATMs display ‘no cash’ boards. The situation isn’t any better at banks. Customers wanting to withdraw amounts above Rs 50,000 need to give a request one day in advance. Bank employees say they are not receiving enough notes to replenish ATM machines. Bengaluru is slighly better off but large denomination notes are not available at ATMs. According to Srinivasa Babu, president, United Forum of Bank Unions, the shortage is due to logistical mishandling by banks and not the elections.
Odisha
In Bhubaneswar, SBI customers were seen rushing from one ATM kiosk to another hoping to withdraw cash but in vain. Of the 11 ATMs of SBI TNIE visited across the city, seven were out of cash. At most places, the ATM shutters were down. At others, a notice “no cash” was pasted. SBI’s Customer Services and Channel Management DGM Girish Chandra Nayak said, “90% ATMs in the state ddon’t not face cash crunch. In the last few days, about 20 per cent are facing the problem.” Though there was no shortage of cash in small denominations, Rs 100, Rs200, Rs500 and Rs2,000 notes were not available, which led to cash crunch. In private banks in the city, cash dispensation was smooth. READ.
Tamil Nadu
Just 14 of the 30 ATMs visited by TNIE in Chennai had cash and four ATMs dispensed only H2000 notes. T Nagar and Pondy Bazaar, the city’s bustling commercial hub, had several ATMs running out of cash. Only one out of 10 ATMs in Usman Road in T Nagar that TNIE visited had cash. Also, not one ATM in Pondy Bazaar had cash. In Nandanam, there were long queues in almost every ATM. Out of four ATMs TNIE visited in Royapettah, only one had cash. ATMs in Mount road also ran dry. However, the All India Bank Employees’ Association said TN was not facing any cash crunch. But in Nagore town of Nagapattinam district, all 10 ATMs were cashless.
Kerala
Unlike other states, Kerala reported no cash shortage on Tuesday. Finance Minister T M Thomas Isaac who is in Hyderabad now, has assigned the Finance Secretary and Treasuries Department director to monitor the cash flow in association with the central bank. On whether the state has surplus cash at its disposal, an RBI official said the central bank was studying the data and will come to know in a day or two. A senior official of the Finance Department said the department contacted RBI and different agency banks which supply money to the treasuries to check the cash position in the wake of reports of shortage in some states. “There’s no shortage of cash,”said an SBI executive.