Despite Arun Jaitley’s assurance, banks and ATMs are still cashless

Finance Minister Arun Jaitley recently gave assurance that there was enough cash with the Reserve Bank to last beyond December 30. However, banks and ATM operators are still complaining that the cash crunch exists.

Multiple banks and ATM operators said that the central bank is supplying only one third of the total demand for cash.

"Cashless is a great idea, but customers will not adopt this at the drop of a hat. We should get at least 50-60% cash of the currency we need. We don't even have any indication whether the cash withdrawal limits will be eased after December 30," a banker told ET.

"The teething problem for us is availability of cash for branches and ATMs to run smoothly. While there have been several claims that cash is adequate, the ground situation is completely different," said another banker.

Jaitley, on December 20th, said that RBI now posses enough new Rs 500 and Rs 2,000 notes to last even beyond December 30.

"The RBI was adequately prepared for demonetisation. There has been no day when RBI did not dispense adequate cash to banks. It has enough currency stocks that will last beyond December 30," the finance minister had said.

But in reality, ATM operators are complaining that banks, on an average, used to ask them to load Rs 25-30 lakh per ATM. But now, it has fallen to single digit since remonetisation with banks keeping most of the cash in branches.

"We gather from banks that only one third of the demand for cash in ATMs is being met ¬ this is a big challenge for us. I think RBI should give clear instructions to banks that they should get 500 and 100 loaded in ATMs instead of the 2,000 notes," Navroze Dastur, managing director, N C R Corporation, the largest operator of ATMs in the country, told ET.

The latest Reserve Bank of India data shows that cash in hand with banks dipped by Rs 70,200 crore in the fortnight ended December 9th, an indication that banks disbursed cash it had with them. But in the previous two fortnights since the ban on high value notes, cash in hand with banks was higher by almost Rs 2 lakh crore.

An analysis by State Bank of India estimates that things will be pretty close to normal within the next two months.

"Our results indicate that 50% and 75% of the total value of extinguished notes can be supplied by Dec-end and Jan-end, respectively, given the current pace of printing. By the end of February, 78%-88% of the currency could be back in the system,” SK Ghosh, group chief economic advisor, SBI, in a report, told ET.