Attention! Cash Hoarders on the Loose at ATMs
Fear of not having enough hard cash in hand driving people to stock up
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.