Cash shortage at ATMs? Here's why operators are finding it hard to replenish them

Over the years, even as digital payments, especially UPI (unified payments interface), have gained traction, currency in circulation remains high. As per the latest data from the Reserve Bank of India, currency in circulation stood at over Rs 42.56 lakh crore as of May 29, 2026. This was a 12 per cent increase year-on-year. Despite this, some ATM machines are seemingly running out of cash.   The Confederation of ATM Industry (CATMi), a body that represents ATM operators in the country, has written a letter to the Indian Banks Association (IBA) warning that the cash available to them to replenish ATMs has been declining.   The letter notes that cash fulfillment (essentially cash that operators receive to replenish ATMs) was 80 per cent in November 2025. That means there was a shortfall of 20 per cent. That shortfall has only been increasing – 36 per cent in March 2026 and 43 per cent in April. Essentially, ATM operators only received 57 per cent of their cash requirement in April.   “Since late December 2025, our members have faced sustained difficulty drawing cash for ATM loading from bank branches and currency chests across several states,” the letter states.   ATM withdrawals have been on the decline. Monthly ATM cash withdrawals have fallen from around 57 crore in January 2023 to around 44 crore by September 2025, points CATMi.   A growing number of digital payments, especially UPI has been the key reason behind this decline.   “Current ATM contracts were premised on a modest natural decline of the order of 2.5 per cent to 3.0 per cent a year, to be absorbed by CPI-linked escalation. The actual trajectory bears no resemblance to that,” CATMi said.   It also pointed out that as the charge a customer pays for ATM use beyond the free limit has gone up, that has only driven more people to digital channels, accelerating the decline that erodes the revenue of operators.   Industry insiders also point to rising costs that are adding to the pressure on the operators. This includes overall transportation costs, fuel, as well as wages paid to security guards and other personnel. The interchange cost (this is what a bank pays another bank when a customer uses one bank’s debit card at another bank’s ATM) was expected to address some part of the operational costs. But the Rs 2 increase from Rs 19 to Rs 21 hasn’t been enough to offset the rising costs, they add.   When asked about the cash crunch, Reserve Bank of India Governor Sanjay Malhotra said on Friday that every year they build a plan of what the currency requirement will be and that is provided to the banks as and when required. He said if anywhere there is a shortage, they will try to ensure cash is rapidly provided.   “We will ensure if there is a shortage, we have sufficient currency to go and fill and refill the ATMs and bank branches,” he said in his interaction post the announcement of the monetary policy statement.   People, especially in large cities, may not be too worried if ATMs run out of cash as digital payments are a common place. However, people who receive direct benefit transfers from the government may feel the impact of the shortage as the ATM in their town may not have enough cash. Many senior citizens still withdraw cash for their daily necessities. Small traders, too, typically depend on cash dealings.   CATMi has urged member banks to treat the restoration of reliable cash availability for ATM replenishment as an immediate, shared priority and has urged banks to engage and resolve the issues urgently.