Printing of 500 notes up, crisis ebbing, says govt

Grappling with unexpected cash crunch in large parts of the country, the government on Wednesday asked banks to monitor ATMs and cash supply in all branches round- the- clock even as RBI stepped up printing of ` 500 notes.

While denying that there was a major cash shortage in Delhi- NCR, the government claimed that the situation is improving in other states.

The government expects at least 80 per cent of ATMs to be functional from Thursday.

Cities and towns across Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan, Kashmir and Uttar Pradesh were impacted by an unexpected cash crunch since late Monday night.

Sources claimed that due to efforts of the government and banks, 76.2 per cent of the ATMs were made functional by Wednesday.

Experts have blamed a series of recent developments for suspected cash hoarding, resulting in a shortage of notes.

They said people might be afraid of the Financial Resolution and Deposit Insurance Bill ( FRDI), 2017, which raised fear that depositers’ money in banks will be used up to bail out banks in case of its failure.

People are also apprehensive after the finance ministry’s directive that bank accounts not linked with Aadhaar will become inoperative, said experts.

This despite the Supreme Court postponing the deadline to link bank accounts with Aadhaar.

On Wednesday, finance ministry officials held video- conference with the heads of state- owned

banks and asked them to ensure that more ` 500 notes are available at ATMs to deal with cash crunch.

RBI has also increased printing of ` 500 notes. Economic affairs secretary Subhash Chandra Garg had said, “The currency printing will increase from ` 500 crore to ` 2,500 crore per day of ` 500 note. With this, in a month RBI will be printing about ` 70,000-` 75,000 crore.”

Mr Garg said that the government suspects that ` 2,000 notes are being hoarded as they are not coming back into the circulation fast enough. But, non- availability of ink resulted in a halt in printing of ` 200 and ` 500 denomination notes at the Currency Note Press in Nashik, an employees’ union leader claimed on Wednesday. “The ink used to print notes is imported, which is not available now, leading to a halt in printing of these ` 200 and ` 500 banknotes,” Jagdish Godse, the president of press workers federation told reporters.

India’s largest bank SBI said that cash availability at its ATMs has increased in the past 24 hours.

“Availability of cash in SBI ATM has improved in the last 24 hours... issue of less cash should come to normalcy soon,” said Neeraj Vyas, DMD ( chief operating officer). However, SBI Research in a report said that there was ` 70,000 crore cash shortfall in the system, which is a third of the monthly withdrawals at ATMs. The report estimated that 9.8 per cent nominal GDP growth would have taken the currency available with the public to ` 19.4 trillion by March 2018, as against the actual availability of ` 17.5 trillion. The proportion of digital transactions stands at a low ` 1.2 trillion.“The apparent shortfall thus could be around ` 70,000 crore or even less,” it said. The finance ministry has said that there has been an unusual spurt in currency demand in the country in the last three months.