ATMs dry-RBI grappling with shortage of paper and ink

DAINIK NATION BUREAU

Are you struggling to get cash from ATMs and your branch? Are you not getting cash as per your need ? If answer is yes then you will have to wait more because RBI has been grappling with shortage of raw materials like paper and ink.

ATMs around the country not only in the rural areas, but also suburban townships of large metros have been facing severe cash crunch for more than ten days now, particularly larger denomination notes. The RBI may be facing raw material shortage to meet the rising cash and currency demand. The RBI estimates the demand for currency using an econometric model which factor in, among others, expected real GDP growth, rate of inflation and denomination-wise  disposal rate of soiled notes. An official says “There have been issues with the raw materials like ink and paper for some time now which has restricted currency supplies to banks. ” .

As a result, `cash in hand’ with banks which comprises cash supplied from RBI and from which banks- release the money to ATMs for dispensing cash dipped to around Rs 60,000 crore as of March 30 from a high of Rs 71,000 crore in December’17.

Currency in circulation has been rising at a higher pace than before since November 2017. While the jury is out on whether the demonetisation has led to digitisation of payments and settlements, bankers say that the mandatory e-KYC norms compliance for payment wallets and other digital instruments has slowed down the pace of transactions through these channels. This in turn has forced consumers to move back to cash for settlements.

Besides, historically demand for notes rises during elections and also whenever there is a pick up in rural activity. The quantity and value of currency notes to be printed is determined by the RBI based on the demands made by banks which release cash in the system through ATMs and the banking network.

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