ATM tweak for new Rs 100 note set to cost banks Rs 100 crorehttps://indianexpress.com/article/business/atm-tweak-for-new-rs-100-note-set-to-cost-banks-rs-100-crore-5268413/

ATM tweak for new Rs 100 note set to cost banks Rs 100 crore

The dilemma that banks and ATM service providers will face is that new and old Rs 100 notes will be in circulation at the same time.

On June 21, RBI had issued a circular mandating control measures for ATMs and also to reconfigure the machine cassettes to accommodate the new set of banknotes coming to the markets.
On June 21, RBI had issued a circular mandating control measures for ATMs and also to reconfigure the machine cassettes to accommodate the new set of banknotes coming to the markets.

THE TROUBLED banking industry will have to pay another Rs 100 crore to recalibrate ATMs — the third such exercise after demonetisation — for dispensing the new Rs 100 notes across the country.

Cash logistics firms and ATM service providers have warned that the latest recalibration could take long, and asked the government and RBI to ensure adequate supply of notes to avoid a cash crunch. The RBI had introduced new notes of Rs 500, Rs 2,000 and Rs 200 since the demonetisation of old Rs 500 and Rs 1,000 notes in November 2016. But, as the recalibration of ATMs took time, many regions witnessed a severe cash crunch. On Thursday, while announcing that it will introduce new Rs 100 notes in lavender, the RBI said: “As is normal, when a new design of banknote is introduced, printing and supply of these notes for distribution to public through the banking channel will gradually increase.”

Loney Antony, MD, Hitachi Payment Services, said: “We believe that the exercise involving the new Rs 100 note could cost over Rs 100 crore and take 12 months to completely recalibrate 2.4 lakh ATMs in the country. As the recalibration for the new Rs 200 note is still not completed, the effort for the new Rs 100 note could take longer, unless planned properly.”

The introduction of the Rs 200 note is already expected to cost banks over Rs 100 crore for ATM recalibration. Banks had already spent over Rs 110 crore for recalibrating ATMs after the introduction of the new Rs 500 and Rs 2,000 notes.

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As indicated by the RBI, the newly designed Rs 100 note will be in circulation through banking channels first — printing and supply of the new notes will gradually increase. “It is important to have sufficient supply of Rs 100 and Rs 200 notes to ensure there is enough lower denomination currency in circulation for ease of transactions,” Antony said.

The dilemma that banks and ATM service providers will face is that new and old Rs 100 notes will be in circulation at the same time. “Any change in the size of a currency note will involve recalibration of ATMs, hence we need to recalibrate ATMs for the new Rs 100 note. The question that arises is how do we recalibrate ATMs in terms of new and old notes? Therefore, overall, the continuity of old notes, introduction of new notes through the ATM channel and their availability will determine whether to recalibrate or not,” said V Balasubramanian, director, CATMi & President, FSS.

“While it is great news and very encouraging to have a true Made-in-India and completely indigenous note, the change in dimensions will make dissemination difficult as it will not be available through the ATM channel until all the ATMs are calibrated,” said Himanshu Pujara, MD, Euronet Services India Pvt Ltd.

During January-March 2018, the frequency and the ticket size of transactions at ATMs across the country, on average, went up by 10 per cent, leading to a crunch in many states. Service providers had then said the shortage could largely be due to a decline in “cash velocity” in those states. The low cash velocity was also triggered by less supply of notes of lower denomination.