ATMs continue to run dry during demonetisation exercise

Despite recalibration ATMs run at a fraction of their capacity due to cash shortage

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The queues outside Automated Teller Machine (ATMs) have reduced over the past 50 days since Narendra Modi's demonetisation exercise kicked off. 

However, this is not because the cash shortage issue has been resolved, but because most bank customers have realised that ATMs continue to run dry even one and a half months after the note ban.

Industry experts explain that even though all ATM machines have been recalibrated to dispense new notes, they are running at a fraction of the capacities due to the crunch in currency notes.

Manjunath Rao, Senior Vice-President & Head of Sales, CMS Info Systems, says, "After recalibration, even though ATMs can hold up to about Rs 42 lakh, on an average we haven't been loading more than Rs 6.76 lakh in our machines."

“In fact, on any given day we have not loaded more than 13,000 ATMs out of the 55,000 that we operate across the country. So on an average not more than 40 per cent ATMs have been working,” she added.

In fact, another cursory look at the loading of cash in ATMs will present a clearer picture. CMS says it loaded Rs 1,528 crore between November 1-8. However, between November 9 and December 20, it was able to fill up only Rs 455 crore across its ATM network.

Another bank manager at a private sector bank explains that even though the cash supply has improved, bankers are looking to use that cash for bank branches and not ATMs. 

“My loyalty is first towards my own bank customers. In an ATM, I have no control over who comes and withdraws money. So in a situation like this, when I have rationed cash, I will first look at giving it to my customers,” he added.

Moreover, most ATMs continue to dispense only 2,000-rupee notes, due to which customers are also preferring to visit the bank branch where their chances of being able to secure 100- or 500-rupee notes are higher.

Some industry experts also believe that the ATM scenario may improve after December 31 as free withdrawal from any ATM for bank customers will not be applicable after tomorrow. 

As a result, banks may look at loading cash in their ATMs as it will result in fee income for them if another bank's customer withdraws money from their non-home bank network.

However, for now, banks are waiting for further direction from the government which is expected on 2016 New Year's eve to understand if the cash shortage situation both at ATMs and banks may improve in coming days.