Cash crunch in ATMs, banks train guns on RBI

Several bank customers are facing inconvenience while trying to withdraw cash from ATMs across the country since Monday.

Most ATMs are out of cash, including those in Karnataka, Maharashtra, Andhra Pradesh, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana.

An estimated 33,000 ATMs were not dispensing cash across the country. There are over 2 lakh ATMs in the country.

More than 5,000 ATMs across the state out of a total of 17,683 were estimated to be non-functional in Karnataka on Tuesday, banking industry sources told DH.

“There is a mismatch of demand and supply of cash across the country,” sources told DH.

The transactions at ATMs, as per the sources, have gone up. Earlier it was Rs 3,000 on an average, now it's Rs 5,000.

Reports suggest officials in the Ministry of Finance have held a meeting with their counterparts in the RBI last Thursday to take stock of the situation.

Bank officials are blaming RBI for the crunch. “We have only RBI as our source of cash. We are not getting an adequate supply of cash from the apex bank,” a deputy managing director of SBI told DH.

The senior bank official also said that despite the fact that government has remonetised the cash, “Almost 30-40% of the remonetised currency is in Rs 2,000 notes. Nobody knows where those notes have gone.”

The alert was raised by Madhya Pradesh Chief Minister Shivraj Singh Chouhan when he said that there is a conspiracy behind Rs 2,000 notes vanishing from the market.

"The currency worth Rs 15,00,000 crore was in circulation before demonetisation. After the exercise, the currency in circulation increased to Rs 16,50,000 crore. But notes of Rs 2,000 denomination are missing from the market," Chouhan said on Monday while addressing a farmers convention.

According to Vijaya Bank MD and CEO R A Sankara Narayanan, there is a probable uptick in the demand of cash in Karnataka because of the upcoming elections.

"However, the government is taking appropriate steps on this front. All banks are coordinating with each other to ensure that cash is easily available. The problem will be sorted out in coming days as all banks are monitoring their currency chests," he told DH.

However, a senior RBI official, on condition of anonymity, said that the central bank has been regularly supplying cash to other banks.

As per the RBI, the cash availability has exceeded the pre-demonetisation levels to touch a record high of Rs 17.97 lakh crore, up 1.9% from November 2016.

Prior to the note ban, the currency in circulation was pegged at Rs 17.64 lakh crore.

Moreover, one public sector bank chairman told DH that the banks’ drive for productivity is also a partial reason for it, along with the RBI curbing cash supply to banks.

“Customer service is one thing. But we have also got to focus on the profitability aspect,” the official said.

Persistant issue

According to industry experts, this issue has been prevalent since demonetisation, and has escalated now.

"The Cash crunch situation has been ongoing since demonetisation. It’s been discussed at an industry level with banks as well as the regulator," Radha Rama Dorai, Managing Director - ATM and Allied Services, FIS, which provides end-to-end solutions for banking and payments, said.

According to Radha, Punjab has seen cash crunch ever since demonetisation whereas the states in the North East have been feeling the pinch over the last four to five months only.