As people waited hours in long queues outside banks and only 40 per cent of ATMs functioned on Friday, two days after the government invalidated currency notes of Rs 500 and Rs 1,000 to curb corruption and black money, the Union Finance Ministry decided to meet Reserve Bank of India officials early on Saturday to resolve the immediate shortage of cash.
“Although there is sufficient new currency available, the problem is emerging in the logistics of its movement and timely stocking. We have called the RBI officials to understand their difficulty and work out a solution,” an official said.
The official said that “1.5 billion pieces” of Rs 2,000 notes — amounting to Rs 3 lakh crore — had been brought into circulation and another 1.5 billion would be infused soon to take the month-end stock to 3 billion pieces, or Rs 6 lakh crore. “There is sufficient money,” said the official.
Watch What Else Is making News
According to RBI, the new Rs 500 notes have currently been introduced only in Delhi and Mumbai with plans to gradually distribute them across the country over the next fortnight.
“The current emphasis is to flood the market with higher value Rs 2,000 notes to quickly make up for the decrease in money supply due to the demonetisation of old Rs 500 and Rs 1,000 notes,” the official said.
Since Prime Minister Narendra Modi announced the demonetisation move on Tuesday night, over Rs 14 lakh crore worth of Rs 500 and Rs 1,000 notes have been pulled out of circulation.
The RBI has started printing the new Rs 1,000 notes and plans to bring them in circulation from December, said sources, adding that once volumes rise, the existing supply of Rs 2,000 would be “controlled” to curb inflationary pressure.
Meanwhile, leading players in the cash logistics industry said that only 40 per cent of the 2.2 lakh ATMs in the country were functional on Friday, when the machines opened after being shut for two days to facilitate the removal of old Rs 500 and Rs 1,000 notes.
“While 70-75 per cent of old currency notes in ATMs across the country have been withdrawn and refilled, only 40 per cent of them (ATMs) were functional during the day due to very high demand and shortage of currency,” said Navroz Dastur, managing director, NCR Corporation, India & South Asia, a leading ATM deployer with a market share of 47 per cent.
According to sources in the industry, even the ATMs that were operational dispensed cash only for a couple of hours due to shortage of Rs 100 notes and the new Rs 2,000 notes, and logistics constraints. They said the problem was compounded by the fact that the new Rs 500 notes were yet to reach banks.
By Friday evening, sources said, the industry had withdrawn around 90 per cent of the invalid currency notes from ATMs across 650 districts.
“At least 40,000 people have been working nonstop for the last 72 hours to do their best to refill the ATMs. But this task is unprecedented and the nation has to come together and see the efforts made by the cash logistics industry and the employees of banks to ensure that public inconvenience is reduced,” said Rituraj Sinha, president of the Cash Logistics Association of India and co-chairman of the FICCI private security sector committee.
“In the next 15 days, the ATMs will become fully functional as currency comes in,” said Dastur.
The Reserve Bank of India (RBI), meanwhile, said in a statement that there was enough cash available with banks and that all arrangements have been made to ensure that currency notes are made available all over the country.
“Bank branches have already started exchanging notes since November 10 and it may take a while for the banks to recalibrate their ATMs; once the ATMs are functional, members of the public will be able to withdraw up to a maximum of Rs 2,000 per card per day up to November 18, 2016; and after that, withdraw up to Rs 4,000 per day per card. Several ATMs have started functioning from this morning as the banks could complete recalibration of these machines to allow withdrawals up to Rs 2,000 to begin with,” the RBI stated.
On Friday, most of the ATMs that dispensed cash belonged to public sector banks.
Arundhati Bhattacharya, chairperson of State Bank of India, the country’s largest public sector bank, said SBI has already made 21,000 onsite ATMs and 8,000 cash deposit machines functional. Offsite ATMs will begin operations very soon, she said.
According to Bhattacharya, the bank recorded deposits of Rs 22,150 crore and currency exchange of Rs 723 crore on Thursday and Rs 10,081 crore and Rs 524 crore, respectively, till 3 pm on Friday.
Some private bank officials said they were yet to receive a sufficient number of currency notes from the RBI to dispense in all their ATMs.
“The bank is working closely with the RBI and is making all efforts to continuously replenish cash at its ATMs to bring the situation to normalcy at the earliest,” said an Axis Bank spokesperson.
The cash logistics industry employs 40,000 people and 8,800 cash vans to refill ATMs in India. In a day, this industry serves about 25,000 ATMs. In the last 48 hours, the industry has not only withdrawn old currency notes but also modified the switches of ATMs to dispense mostly Rs 100 currency notes.