Crunch continues as cash is back as king

It has been six months since demonetisation but “Is there cash in the ATM?” continues to be the most popular question among Indians even today.

Though prominent Indian banks claim there is no crunch and the currency in circulation is in keeping with demand, they also agree that ATMs run dry during long weekends. The shortage at ATMs eased in January with the government pumping new ₹500 and ₹2,000 notes into the system. But cash logistics companies claim the supply is still inadequate.

“We have received complaints of ATMs going dry from several places. The fact is that only 60% of the currency in circulation has been replenished. So there is still not enough cash for adequate refilling of ATMs and we are struggling. The amount of money given by banks varies,” said NSG Rao, secretary of the Cash Logistics Association.

The logistics association said banks supply adequate cash for ATMs during the beginning of the month, when salaries are being paid. After that, the supply thins. Rao adds RBI has not shared specific data on currency pumped back into the economy.

The RBI in a report in March said that 78% of consumer payments in India are in cash. And data from the central bank shows that although cash transactions halted during the first two months after demonetisation, they increased since January. “The crunch continues with cash withdrawal levels going back to pre-demonetisation days,” said Ashwin Parekh, banking expert and managing partner, APA services.

According to RBI data, ₹13.32 lakh crore was in circulation at the end of March, much lower than the ₹17.97 lakh crore in the system on November 4, just days before demonetisation.