At­ten­tion! Cash Hoard­ers on the Loose at ATMs

Fear of not hav­ing enough hard cash in hand driv­ing peo­ple to stock up

The Economic Times - - Front Page - Pratik.Bhakta @times­group.com

Mum­bai: Still find­ing it hard to get cash at an ATM? That’s be­cause peo­ple haven’t stopped hoard­ing notes. The sup­ply of cur­rency to au­to­mated teller ma­chines has risen to about 80-85% of pre-de­mon­eti­sa­tion lev­els but the fear of not hav­ing enough hard cash in hand is driv­ing peo­ple to stock up.

“The mo­ment there are .₹ 500 notes at an ATM, peo­ple tend to queue up and keep the cash with them even if they don’t need it,” said Anand Garollu, In­dia ser­vices gen­eral man­ager, NCR Cor­po­ra­tion, which makes and man­ages cash dis­pensers. “I be­lieve this fear among the gen­eral pub­lic will take another few weeks to ebb and make things ab­so­lutely nor­mal.”

ATMs are get­ting more foot­falls than the av­er­age be­fore Novem­ber 8, when it was an­nounced that the old .₹ 500 and .₹ 1,000 notes would cease to be le­gal ten­der.

“If an ATM was re­ceiv­ing 120 cus­tomers daily be­fore, now it hov­ers around 130 to 140, still around10% more,” Garollu said.

Im­me­di­ately af­ter the de­mon­eti­sa­tion an­nounce­ment, ATM re­plen­ish­ment rates plum­meted as RBI strug­gled to print new notes fast enough. Also, the ma­chines needed to be re­cal­i­brated for the new notes, which were smaller than the pre­vi­ous ones. That meant long queues at ATMs — or the ones that had cash — even as weekly with­drawal limits were put in place.

While the over­all weekly with­drawal limit of .₹ 24,000 on sav­ings ac­counts re­mains, the daily curb on cash from ATMs has been lifted. That’s one of the rea­sons ATMs are emp­ty­ing out rapidly, ex­perts said. The limit on sav­ings ac­counts will be raised to .₹ 50,000 from Fe­bru­ary 20 and abol­ished al­to­gether from March 13, RBI said last week. That could calm fears and re­duce the propen­sity to hoard, bankers hope.

“The sup­ply should at­tain com­plete nor­malcy by the end of Fe­bru­ary 2017,” said Ravi Goyal, man­ag­ing di­rec­tor AGS Tech­nolo­gies, which re­plen­ishes ATMs through sub­sidiary Se­cureValue In­dia.

ET sent ques­tions to all the com­pa­nies con­cerned. In re­sponse to an email, SoftBank said, “We don’t com­ment on spec­u­la­tion”. Paytm did not re­spond to ET’s ques­tions. Snapdeal and Alibaba, in their re­sponses, said no such trans­ac­tion was be­ing planned.

ET had ear­lier re­ported that Alibaba is lead­ing an in­vest­ment round of .₹ 1,350-1,700 crore in the on­line re­tail mar­ket­place of Paytm, mark­ing the for­mal en­try of the Chi­nese ma­jor into a mar­ket where it will now com­pete with Amer­ica’s Ama­zon and In­dia’s Flip­kart. “The man­age­ments of Snapdeal and Paytm are wait­ing to see how the two com­pa­nies fare in the first two months of 2017,” said the per­son quoted above.

Snapdeal, which has seen value ero­sion in the past few quar­ters, is now be­ing val­ued at $3-3.5 bil­lion, down from the last fund-rais­ing round that pegged it’s val­u­a­tion at $6 bil­lion.

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