Banks are unable to meet the demand for cash, says ATM industry

At a time when the Reserve Bank of India (RBI) and banks are blaming the cash management companies for automated teller machines (ATMs) running dry, representatives of the ATM industry said it is banks that are unable to meet the demand for cash.

“ATM service providers do a daily calculation of the cash required, called indent, which is sent to banks in the night for the following day. Till March end, 90 per cent of the daily demand was being met by the banks. However, it has now reduced since the first week of April,” said V Balasubramanian, spokesperson of the Confederation of ATM Industry (CATMi).

“Our indent has remained the same since March, but banks have not been able to meet it since the past four-five days,” said Balasubramanian, adding, public sector banks are now able to meet about 30 per cent of the demand, whereas private banks are faring much better but not at the level they used to earlier.

ATM industry executives say the demand for cash has gone up but the supply has failed to keep pace.

“The economy has grown but there has been no additional currency in circulation. We are at the same levels as before November 2016 despite a growing economy. The government expected a lot of this demand would move to digital. While digitisation has been successful, it has not been enough to bridge the gaps due to short supply of the currency,” said Navroze Dastur, managing director (MD), NCR Corporation.

The government’s push towards digital payments can also be one of the reasons behind the cash shortage, said an ATM executive.

While Finance Minister Arun Jaitley attributed the cash shortage to a ‘sudden and unusual increase’ in demand, ATM service providers said that the transaction volume and ticket size have been climbing steadily since the past few months.

“ATM transactions have been steadily climbing and the daily withdrawals have increased in the past three-four months. However, banks have not been able to meet the rising cash requirements in some places in the past one week. We are seeing a cash shortage in certain pockets, particularly in Bihar, Andhra Pradesh, and Telangana. Some states like Tamil Nadu have seen no impact,” said K Srinivas, chief executive officer and MD, BTI Payments, an ATM service provider.

To meet the crunch in the affected states, cash is being flown in from neighbouring states.

“We have been getting 40-60 per cent cash from banks in other states. One of the latest reasons for the shortage could be the conversion of Rs 2,000 cassettes to Rs 200 - and emphasis has been on printing lower denomination notes. The cash-carrying capacity of the ATMs has gone down in terms of value,” said Radha Rama Dorai, MD-ATM & Allied Services, FIS Payment Solutions & Services India.

She added that the cash crunch situation has been ongoing since demonetisation and the industry along with banks is in talks with the regulator about this. 
 

“Cash crunch has been there in different states at different times and is not a recent phenomenon. Punjab has seen a cash crunch ever since demonetisation whereas states in the Northeast have been feeling the pinch over the last four-five months,” she added.