- RBI is reviewing cash availability in banks and ATMs amid reported shortages
- Cash shortages were mainly reported from tier-II and smaller cities
- RBI seeks bank branch cash inventory details to check timely ATM cash replenishment
The Reserve Bank of India (RBI) is assessing the availability of cash in bank branches and Automated Teller Machines (ATM) to address complaints of cash shortages in many parts of the country over the past 12 weeks, sources have said.
Complaints of a cash shortage emerged from several tier-II and smaller cities. Bank customers, including those of SBI, alleged that ATMs ran dry, NDTV Profit reported, citing people familiar with the matter.
The RBI has sought details of cash inventories at bank branches to establish whether banks have been recharging ATMs with adequate cash on time. The sources said the regulator might consider taking action if banks are found to be maintaining insufficient cash at their ATMs.
Also read: India's Currency Paradox: Cash Is King But Why ATMs Are Drying Up
The alleged shortages have adversely impacted cash management firms, which logged losses during the period.
Bankers, however, said cash inventory figures can be misleading because they include soiled or damaged notes, which can't be used in ATMs. They said there would be a mismatch between the inventory figure and the actual figure fit for ATMs.
Senior industry executives pointed out that ATMs as a business have become cost-heavy, with inadequate incentives to maintain and expand them. The low-yield character has made the business less attractive for banks.
The issue was also flagged by the Confederation of ATM Industry (CATMi) in June. The body wrote to the Indian Banks' Association (IBA) and urged it to replenish ATMs with adequate cash.
ATM cash fulfilment levels ranged between 57% and 64% during April and May, said CATMi. This meant, the body added, that a significant portion of cash requirements remained unmet. Karnataka, Andhra Pradesh and Telangana led in cash shortfalls in ATMs.
