The current shortage of cash in ATMs in many parts of the country is not Demonetisation 2.0 and there is no threat to banking system. This is what Sanjeev Sanyal, principal economic adviser in the finance ministry, told ET Now. The problem had been identified and there was nothing to worry about, he said. “There is nothing to panic about. Every effort will be made so that ATMs will have adequate cash,” he said.
Sanyal said there had been some “unusual demand” for cash in recent weeks, but he did not want to speculate on reasons for higher cash requirement. He also mentioned that a decision to stop printing new Rs 2000 notes was taken a few months ago.
For the last few weeks, several areas in Telangana and Andhra Pradesh have reported shortage of currency. Now, similar reports are coming from eastern Maharashtra, Bihar and Gujarat too. According to an ANI report, people in Delhi said that most of the ATMs are dispensing only Rs 500 notes.
Finance Minister Arun Jaitley stepped in today to defuse the panic over cash crunch, saying there was more than enough currency in the system. His statement came amid reports of ATMs going dry in several states. Jaitley, however, acknowledged the shortage, adding that it was “temporary”, probably caused due to “sudden and unusual increase” (in demand) in some parts of the country. “The temporary shortage caused by sudden and unusual increase in some areas is being tackled quickly,” Jaitley tweeted.
SBI chairman Rajnish Kumar said, “I don’t think it’s right to make statement that there is shortage of currency. ATM availability at around 88% which is normal.” Citing RBI data, SBI chairman said that currency in circulation as on April 6 was Rs 18.17 lakh crore, which was more than the currency at the time of demonetisation.
Cash crunch in ATMs may also be the result of a slowdown in deposit growth. During the year ended March 2018, bank deposits grew by a measly 6.7% compared to 15.3% in 2016-17. During the same period, bank credit grew 10.3% compared to 8.2% in the comparable period in the previous year.
Source: Economic Times