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ATM Cash Crunch: RBI to ramp up printing of Rs 500 notes; shortage may continue for 5-7 days

While there are many speculations for this shortage, the government and the Reserve Bank have said it's a temporary disruption and normalcy will return within three days. Also, the RBI is ready to go in for a five-fold increase in the printing of Rs 500 notes to deal with cash shortages.

twitter-logo BusinessToday.In        Last Updated: April 19, 2018  | 12:49 IST
ATM Cash Crunch LIVE: RBI to ramp up printing of Rs 500 notes; shortage may continue for 5-7 days

Several states have been hit by a fresh currency shortage with ATMs running dry. Some of the most affected states are Andhra Pradesh, Gujarat, Madhya Pradesh, Chhattisgarh, Karnataka and even parts of the National Capital Region. While there are many speculations for this shortage, the government and the Reserve Bank have said it's a temporary disruption and normalcy will return within three days . Also, the RBI is ready to go in for a five-fold increase in the printing of Rs 500 notes to deal with cash shortages. However, Financial Services Secretary Rajiv Kumar said that about 10-12 per cent of the ATMs have been hit by the cash shortage and it may take another five to seven days to get back the supply.

LIVE UPDATES

11:55 am:AAP leader Raghav Chadha said that his removal as an adviser to the Delhi government was a tactic to divert the people's attention from the incidents of rape and the cash crunch in ATMs and banks in some parts of the country.

10: 30 am: In Madhya Pradesh, People continue to face cash shortage. A resident of Bhopal told ANI: 'I have been to more than 12 ATMs since yesterday, but neither had money, we are facing a lot of problems due to this'.

 

CURRENCY ADEQUATE, NO NEED TO PANIC
Economic Affairs Secretary Subhash Chandra Garg told journalists the government suspects that Rs 2,000 notes are being hoarded as they are not coming back into circulation fast enough. "We have not got this investigated, but you can assume this is the one note which most suitable to hoard as this is a high value note. But this does not affect the overall supply of Rs 2,000 notes," he said. Garg said there are about Rs 6.7 lakh crore worth of Rs 2,000 notes in the system and they are more than adequate to meet the transaction demand.

HOARDINGS STRONGER IN SOME PARTS
According to market sources, there are apparently also apprehensions about safety of deposits due to recent spurt in banking frauds. However, Garg dismissed this as an unfounded rumour. He said there is an unusually high demand for currency and there are multiple factors for this including tendency to hoard cash and it is stronger in some parts of the country. There is also a perception that there may be shortage of currency in the future. So people have started withdrawing and it has contributed to the crisis, he added. "We keep adequate stock of currency notes, which is one-sixth of the currency in circulation. Currently, the currency in stock is about Rs 2 lakh crore and the reserves are adequate to meet any unusual spurt in demand," he said. The unusual spurt in currency demand since January was also met through reserves, he added.

PRINTING OF RS 500 NOTES TO GO UP
The Economic Affairs secretary said that the government has taken steps to increase the supply of currency in case demand goes up. "The currency printing will increase from Rs 500 crore to Rs 2,500 crore per day of Rs 500 notes. So in a month, we will be printing about Rs 70,000- Rs 75,000 crore,'' he added. This should give you assurance that we are geared up to meet the rising demand, he said. Garg further said the government will make all efforts that there is no shortage of cash irrespective of the level of demand. On ATMs going out of cash, he said some of them may have some problem, but this is a temporary phenomenon.

FRDI BILL OR SCAMS NOT RESPONSIBLE FOR CURRENCY SHORTAGE
Subhash Garg also dismissed rumours that the cash shortage is related to the recent scams in the banking sector, including one allegedly perpetrated by Nirav Modi or the Financial Resolution and Deposit Insurance (FRDI) Bill. The shortage may also be due to some states distributing more cash benefits, it has nothing to do with recent scams, Garg said. He said there are rumours floating around suggesting currency shortage in the country but it is not true. Usually, he said, the currency supply every month used to be around Rs 20,000 crore but in the last two-three months, it has doubled to Rs 40,000-Rs 45,000 crore. In the first 13 days of April itself there has been a demand of Rs 45,000 crore, he added. The secretary assured that there was no reason for anyone to fear or any apprehension that either private sector or public sector banks are in danger.

BIG PICTURE: DRY KIOSKS AND LONG QUEUES
While the cash crunch across the country has brought the ATMs to a dry run, let's take a tour of various states.

DELHI
Residents of several parts of suburban Delhi were left high and dry with ATMs running dry. Central Delhi, however, was relatively less affected, being catered to by almost all major ATMs. Ber Sarai, Okhla, Burari and Mayur Vihar were among those that reported a severe cash crisis. Ber Sarai resident Rakesh Kumar said, "None of us could find a working ATM in Ber Sarai so I decided to come here instead. My friends have given me their bank debit cards and asked me to withdraw cash for them because we have not been able to access cash in our area in the past two days. Even in Bengali market only one of the four ATMs had cash."

MADHYA PRADESH
The ATMs in most parts of Madhya Pradesh have gone dry even as chief minister Shivraj Singh Chouhan tried to blame the opposition for the crisis, alleging that Rs 2,000 notes were being hoarded as part of a conspiracy. "Banks don't have money. We are getting reports about this from across the state, but we will tide over it," Finance Minister Jayant Malviya told INDIA TODAY . Madhya Pradesh is in the midst of wheat procurement and the state government has to procure wheat worth about Rs 38,000 crore by May-end. Half of this money has to be paid in cash to the farmers as promised by CM Chouhan.

MUMBAI
ATMs in Mumbai continued to dispense currency on Tuesday without any hiccup. INDIATODAY TV visited three different banks in different parts of the city to take stock of the situation. The Saraswat Bank ATM in Lower Parel near Deepak Talkies was dispensing currency notes of all denominations. At Chhatrapati Shivaji Terminus, an HDFC Bank ATM saw a brisk flow of patrons, but there was no queue of waiting customers. At Dalal Street, the SBI ATM had a long queues outside but customers said they were getting crisp new notes of Rs 200.

GUJARAT
For the third consecutive day, empty ATMs greeted bank customers in the city. People returning empty-handed from ATMs were incensed that they had to run from pillar to post to access their own hard-earned money. Irfan Bangali, a mobilephone retailer in Ellisbridge of Ahmedabad which is the commercial heart of the city, claimed there were about 20 ATMs within a five-km radius, none of which was working.

CHHATTISGARH
Amid reports of cash shortages in several states, CM Raman Singh on Tuesday said his state has also been witnessing it but expressed hope that the crisis will be resolved shortly. Some local newspapers have reported that ATMs are running out of cash in districts like Korba, Surajpur, Dhamtari and Mungeli for the past few days.

(Ilma Hasan, Hemendra Sharma, Mayuresh Ganapatye, Jumana Shah with PTI inputs)


 

 

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