What jammed the ATM: Secrecy and no Plan B

Many ATMs have three-four drawers, also called cassettes, in which notes — of Rs 100, Rs 500 and Rs 1,000 — are stacked.

Written by George Mathew , Khushboo Narayan | Mumbai | Updated: November 14, 2016 1:35 pm
rbi, currency exchange, black money, old notes, new notes, demonetisation, demonetisation policy, bank atms, cash rush, india news, economy news, 500 rupees notes ban, 1000 rupees notes ban, latest news A woman walks past a closed ATM in New Delhi.

THE RESERVE Bank of India (RBI) has said the 4,000 currency chests across the country have adequate stocks of notes, but poor logistics and a time-consuming ATM recalibration process have resulted in massive public inconvenience. Senior bankers now say advance preparation and better back-office support could have mitigated this.

Many ATMs have three-four drawers, also called cassettes, in which notes — of Rs 100, Rs 500 and Rs 1,000 — are stacked. Some have just two. Each cassette can identify a particular denomination currency note given certain unique ‘pointers’, and based on the cash available, the ATMs are so programmed to dispense Rs 1,000, Rs 500 and Rs 100 notes in an appropriate combination.

WATCH VIDEO: PM Modi Reveals How He Planned Demonetisation Gradually In 10 Months

Now, till the cassette holders in the ATMs are reconfigured to identify the new currency notes of Rs 500 and Rs 2,000, they can hand out only Rs 100 notes. This means that instead of one Rs 1,000 note, an ATM has to give ten Rs 100 notes, and instead of one Rs 500 note, five Rs 100 notes.

“If the government and the RBI had increased the circulation of Rs 100 notes in the system over the past couple of months, the transition could have been smoother,” said a banker, who did not want to be named.

“Further, the ‘pointers’ for the new Rs 2,000 note could have been provided in advance, so that one of the three or four cassettes in the ATM could be reconfigured to identify it,” said another banker handling technology. “This could have been done without compromising on the secrecy,” the banker added.

Typically, every drawer or cassette in an ATM can contain 2,500 currency notes. An ATM with three cassettes can carry a maximum of 7,500 currency notes at any given time. Earlier, it was configured to contain Rs 100, Rs 500 and Rs 1,000 notes. Split equally, it could contain Rs 40 lakh.

Now, with just Rs 100 notes, even if all three cassettes are configured to read them, an ATM can contain only Rs 7.5 lakh. With banks unable to fill ATMs with Rs 500 and Rs 2,000 notes, customers have been withdrawing all Rs 100 notes, with many even reportedly hoarding, anticipating a prolonged shortage of required notes in the banking system.

Banks, which were in the dark about the government’s demonetisation move, are struggling to cope with the situation on several fronts. Recalibration of ATMs is a gargantuan exercise which is expected to take, as admitted by Finance Minister Arun Jaitley, up to three weeks.

WATCH VIDEO: India Queues Up Outside ATMs

“The new note specifications are released by ATM OEM manufacturers after extensive testing. To have these recalibrated on all 220,000 ATMs in the country will take some time as engineers will have to physically visit the ATMs for recalibration,” said Ramaswamy Venkatachalam, Managing Director, Fidelity Information Services (FIS), a banking and payments technology provider.

The cash logistics industry employs 40,000 people and 8,800 cash vans to refill 2.20 lakh ATMs in India spread over 650 districts. In a day, this industry serves about 25,000 ATMs. The logistics industry has not only withdrawn old currency notes but also modified the switches of ATMs to dispense mostly Rs 100 currency notes which get depleted in minutes. Over 50 per cent of ATMs in metros and 75 per cent in semi-urban areas were non-functional at any point of time.

“Banks were not told about the size of the notes or the recalibration issue in advance. They should have anticipated such problems but there was no coordination or interaction with the banks ahead of the announcement,” said the CEO of a nationalised bank.

“It’s a logistics and recalibration issue. Of course, we have got time up to end of December. But the initial rush is because people need money to meet their immediate needs. I would think the next one week would be challenging. It’s challenging for people and banks. For us, there’s no closing time. Clear instructions have been given that till the last customer goes, it has to continue… even if it goes right up to midnight,” said a senior official of a bank.

Over 40,000 people have been putting in extra hours for the last few days to refill the ATMs. “This task is unprecedented, and the nation has to come together and see the efforts made by the cash logistics industry and the bank employees to ensure that the public inconvenience is reduced,” said Rituraj Sinha, president of the Cash Logistics Association of India.

WATCH VIDEO: Demonetisation: Arvind Kejriwal, Kapil Sibal, Akhilesh Yadav Slam Modi Govt

Worried over hoarding of small notes, the RBI on Sunday assured that “enough cash in small denominations is also available”. “The RBI urges that public need not be anxious; need not come over to banks repeatedly to draw and hoard; cash is available when they need it,” it said.

When will the crisis blow over? Serpentine queues outside banks and shortage of notes are expected to continue till all ATMs are up and running. “We are in constant touch with the banks and the cash logistic companies to sort out issues on the field quickly and maximise the ATM touch points,” said Venkatachalam.

Small traders and people from the lower strata of the society are severely hit by the currency move. “Go to any queue outside a bank branch, most of them will be domestic helps, drivers, labourers and people without bank accounts. I feel sorry for them. They had to forego one day’s work to stand in the queue for hours to get cash for their daily needs,” said a senior bank official.

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  1. A
    Nov 13, 2016 at 11:13 pm
    India is highly poted country by these secrecy u cannot fulfill the low cl and middle cl people's daily needs why have they to suffer and laticharged for there money.it's total fail if the govt stands stubborn on its tughlak ideas .
    1. A
      Nov 14, 2016 at 2:53 am
      I appeal to media , all news papers and chanels to be constructive and not destructive . Do not spread panic . We Aam admi are also on ground and daily speak casually to people like iron wala, maids , small labourers and no one has major problem . It is media which is creating perception of problem
      1. B
        Nov 14, 2016 at 10:27 am
        The reason why the generation of black money has existed in the system is ,political funding of elections,party funds out of scrutiny of RTI, political parties exempt from income ,tax,no taxation of agricultural income,political influence in big loan advancements, which has led to huge NPA in all public sector banks,control of and mive misuse of natural resources of the country.The promised Lokpal is nowhere in site.Nor in Delhi or else where,where ever they exist they don't have adequate powers to deal with corruption.Ther is no serious attempt to adequately tackle these issues.lt;br/gt;There has been mive administrative failure on the part of government in demonetisation of 1000'500 currency notes which has resulted in avoidable sufferings to the poorest ,lower middle cl, and the service cl in the urban areas.Such an atrocious action in any developed country would have brought down the government.lt;br/gt;If this situation is allowed to continue, there may be food roits in the country soon.
        1. R
          Nov 14, 2016 at 4:08 am
          This was good step by the government to check fake currency but i am not very sure about black money becoz the people who stand on queue on banks to change notes are all middle cl and students and common man, no rich is seen among them. Its we common man who actually got trapped in this mess. I will totally blindly support anything our govt will do to change our society from evil things like black money and fake currency but what went wrong is a country with second largest potion when we change notes to new one the govt should have done arrangement for this before 3 or 4 months back, but what now happened is one day suddenly 500 and 1000 notes got banned and after that govt is thinking now what to do becoz even atms are not yet configured or bank doesnt have enough staffs to control the rush. If it was for 1 or 2 days it was ok but it seems it will go on for a month seems very difficult and most atms opens and closes within few hours becoz cash get finished. Daily we cant stand in atm or bank for hours to get money. Just think about people who working in bank see there conditions they doing great job they working day night. All these should have be avoided if govt planned this well and arranged things before banning old notes. A country huge like india its not simple to suddenly change notes from one to another for that we need to plan properly and arrange things so that common ppl dont affect. For last many days i have stood in long queue for hrs for changing notes so i have seen and felt the pulse of the people who were standing there, all are poor or middle cl they are not happy. Even many pvt banks keep lot of restriction of ppl entry into bank in rural area. They are more worried about city area. In my place here no bank is giving new 500 notes only we get is 2000 note and 100 notes. Suppose we get 2000 rs note in our hand and we need to have a tea or snacks then who will give change when next lower note is 100 and no shops will give that much 100s change during a time like this, here the real problem is becoz govt has not planned pro actively. Please do it in a systematical way supply both 500 and 2000 properly. Banks are giving mostly 20rs notes 100s notes and 2000rs notes but 50 rs notes is missing we need more 50rs notes and 500rs notes.
          1. H
            Nov 13, 2016 at 11:41 pm
            3 Cheers for MODI...Surgical strikes have collateral damage...Some foot soldiers suffer minor injuries....BUT IN LONG RUN. "dia Badal Raha hai"
            1. H
              Nov 13, 2016 at 11:50 pm
              There are reports that the rich are getting their servants to put lacs of notes in their servants accounts. So the servants are Very happy doing it. Now servants will get some commission of 30% of the deposits
              1. H
                Nov 13, 2016 at 11:37 pm
                There is NI NEED FOR PLAN B...Only 1 plan FOCUS and Aim...CORRUPTION
                1. P
                  P kedar
                  Nov 14, 2016 at 4:21 am
                  This is the only chance that a common person will get to do something for the country .....something good and for that he just need to cooperate this will definitely make a difference in the long run.......enough cash is available said by the officials and 2k rs is enough for a common man for atleast a week ......it takes only 1 hr to withdraw cash ....so dont panic ....support
                  1. G
                    Nov 14, 2016 at 1:16 am
                    By demonetising , govt has communicated their inability to catch the black money holders and so have resorted to carpet bombing the entire public. Great job!! But the joke is when it is called surgical strike....
                    1. A
                      Amit Kumar
                      Nov 14, 2016 at 2:29 am
                      You are proud of your notes .. but they have only that much value as the "promise" on it. Each 500 and 1000 note has promise.. And its not new that Government can go back on their promise... What control do you have with currency??? Even all land and property is with you with the promise that Government will protect your right... With out that you have no property... you are always been under the control of law which is under control of government.. Youe so called freedom is illusion ... The best system of exchange was the age old "Barter System" .... but we are far away from even imagining that ... at least it may be possible in villages ...
                      1. A
                        Athena Eos
                        Nov 14, 2016 at 4:50 am
                        This is clearly the BJP smartheads overlooking the details of the demonetization process.While the move is certainly laudable and necessary by all means, a little bit of 'look before you leap' would have made it easier for the citizens. Bhakts are finding it hard to accept the truth. Anyway, kudos to Modiji for implementing this, albeit in a shoddy way.
                        1. T
                          True india
                          Nov 14, 2016 at 10:49 am
                          This is very bold move and we should see things returning to normalcy in a week. Over country should be benefited a lot.
                          1. A
                            Ashok bhat
                            Nov 14, 2016 at 3:20 pm
                            Soldier says no enmity with stan still in quee at border to save country and sacrifice his life can we not stand in que to save country shame to opposition who are bent to ruin this country
                            1. B
                              Nov 14, 2016 at 7:56 am
                              100 rupee notes should have been printed mively. Also the new 500 should have been printed before 2000. People need 500s and 100s and not 2000s. This is a gaping in thinking and preparations.
                              1. C
                                Chandan Bhowmick
                                Nov 14, 2016 at 2:24 am
                                Banks will face lot of problems after accepting huge fund since they will have to pay huge amount of interest to depositors without investing the fund.govt must have to look this issue also and have to compensate the loss
                                1. C
                                  Nov 14, 2016 at 4:26 pm
                                  I waited in the queue for about 2.5 hours. When my turn came, I casually asked the cashier, did anyone exchange one 500 or one 1000 rupee note? How come all the people has at least 4000 to change? Some young boy is in the queue for the third time to encash another 4000!
                                  1. A
                                    Nov 14, 2016 at 4:30 am
                                    I agree with you 100%, the average person can not grasp the Idea or the reason why Modi is doing this. Even now, Modi is dictating in how much of our money we can take out, it is our money. The Modi Gov. did not lend or give to us, it is something that took a while to earn, if the earning was illegal, then the Gov. will need to prove and take steps. Modi. The present situation is infringing in our rights, it is against the consution and even the law, if Modi gets away with this then he can order the banks even not to release in the limited amount of withdrawals, and even put a limit on the debit and credit card transaction. The average person may think that I am mad, but I have witnessed this in several countries, including Italy that put a limit of 1000 Euro for any cash transactions, Australia in the .60 during the credit squeeze, the bank would only give you funds to buy food, in Argentina in the 2000, the valued 1 Peso to be equal to 1 US$, instead of 15-to 17 peso to US$, the economies were effected for a long time, and some countries never recovered from this. Modi first excuse was to stop funding terrorism, which is not the case, the stani terrorists do not need our funds, few hours after the tune changed to stop the Black Money, again this is an impossibility anywhere in the world, but the control to the banks that Modi has created is the reality.
                                    1. S
                                      Nov 14, 2016 at 2:45 am
                                      George and Khusboo you have quoted two bankers on condition of anonymity and both these jokers don't understand how ATM cettes are recalibrate and neither both of you have bothered to also go into the details of reclibration. As a result you are only adding fuel to fire. Please note recslibration cannot be done if the new currency notes are not made available to ATM Manufacturers for currency qualification which means secrecy is compromised
                                      1. D
                                        Nov 14, 2016 at 2:06 am
                                        A family of 2 can withdraw rs 5000.00 everyday. Which Common man family needs Rs. 5000.00 every day for normal daily life? Media a making noise and creating panic.
                                        1. D
                                          Nov 13, 2016 at 11:45 pm
                                          This is not really true that only lower strata of the society have to endure queues. I have seen middle cl people also in the queue - many of them have to pay their own help and so forth.
                                          1. M
                                            Mukesh Bansal
                                            Nov 14, 2016 at 11:46 am
                                            Revolution is in offing. lt;br/gt;Several poor people will start losing jobs soon.
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