Shortage of ₹100, ₹200 notes may delay RBI's ATM target, say banks

Cash logistics firms and banks cite note supply and operational costs as key concerns in meeting RBI's target for ATMs dispensing ₹100 or ₹200 notes by September 2025

Banks and cash management companies have said that they will find it difficult to maintain a steady supply of ₹100 and ₹200 denomination notes after the Reserve Bank of India (RBI) mandated that 75 per cent of the automated teller machines (ATMs) must dispense either of the notes by September 30, 2025.

 

As part of its endeavour towards enhancing public access to the frequently used notes, the RBI had asked all banks and white label ATM operators (independent operators) to ensure that 75 per cent of their ATMs dispense ₹100 or ₹200 denomination notes on a regular basis from at least one cassette by September 30. And, this should go up to 90 per cent by March 31, 2026. 

 

Banks typically fill all four cassettes in an ATM with ₹500 notes so that the machines do not need frequent replenishment.

 

Banks have started the process to take stock of the situation, industry players said, indicating that meeting the September deadline would be challenging in view of the supply constraint.

 

“The RBI’s move is intended to improve customer convenience. It is important to have the right mix in the ATM,” said Vivek Iyer, partner and financial services risk leader, Grant Thornton Bharat.

 

“It will require more frequent replenishments. Earlier, banks used to load lower denominations according to demand in a specific ATM. However, availability of lower denomination currencies is a concern,” Iyer added.

 

According to RBI data, the share of ₹500 in the total notes in circulation increased from 25.4 per cent in March 2020 to 40.9 per cent in March 2025. During the same period, the share of ₹200 increased from 4.6 per cent to 5.6 per cent.

 

The ₹100 note, which had a share of 17.2 per cent at the end of March 2020, fell to 13.3 per cent by the end of March 2023, before rising to 14.7 per cent by March 2025.

 

“If we have to load lower denominations in a cassette, it will require re-calibration to accommodate the ₹100 or ₹200 notes. This means we will have to visit those ATMs/cash in transit vaults to make this change. This will be an additional cost to the banks/managed service providers. The biggest challenge is the availability of these notes on an on-going basis,” said Navroze Dastur, managing director (MD), India and regional vice-president (VP), Asia Pacific, NCR Atleos.

 

The challenge of supply of lower denomination notes is more pronounced in smaller cities.

 

“For most of the banks, availability of ₹500 is good. In metro cities, all the denominations will be available. However, in smaller locations, bigger banks, which have a currency chest, will have all the denominations and good quality notes. Whereas, smaller banks will be dependent on the deposits in their branches where people tend to deposit higher notes,” a bank official said.

 

Typically, an ATM’s four cassettes have the capacity to hold around 2,000-2,500 notes each. According to experts, filling the cassettes with ₹500 denomination notes allows higher storage, reducing the frequency of refills.

 

Filling of ₹100 and ₹200 notes result in faster depletion and more frequent cash replenishment. This will cost banks and managed service providers more.

 

Decisions about which denominations to load are made by banks in consultation with managed service providers, based on demand patterns and cash forecasting for the specific ATM.

 

Fear of regulatory penalty due to unavailability of cash is yet another reason why banks prefer to loan ATMs with higher denomination notes.

 

“ATMs are stocked with higher denomination currencies as they have to ensure they don’t go cash out. Otherwise, we have to pay a penalty of ₹10,000 if it remains out of cash for 10 hours in a month. And, it also hits the image of the bank,” the official added.

 

According to RBI’s data, the total ATMs in the country stood at 255,885 as on March 31, 2025. Of this, around 36,000 are white label ATMs.

 

“People require small denomination notes, especially in smaller towns and villages. So, ATMs dispensing these small denomination notes makes tremendous sense. Although this move may see increased operational pressure and higher costs as it requires more frequent filling, it is a welcome move. We will strive to implement it within the RBI prescribed timelines,” said K Srinivas, MD & chief executive officer (CEO), India1 – a white label ATM manufacturer.

• RBI mandates 75% of ATMs should dispense either Rs100/200 banknotes by Sep 30, 2025 & 90% by March 31, 2026
• Meeting the deadline difficult due to supply constraint 
• 40.9% of the total notes in circulation are Rs 500 banknote, up from 25.4% in 2020
• Cassettes in many ATMs needs recalibration 
• Supply of lower denomination notes more challenging in smaller cities
• Cash outage over 10 hours in ATMs attract RBI penalty, promoting banks to stock up higher denomination notes
• Total ATMs in the country stood was 2,55,885 as on March 31, 2025