Home / Nation / Cash crunch may hit whole nation soon, no supply to banks for 6 days but FM Jaitley denaied

Cash crunch may hit whole nation soon, no supply to banks for 6 days but FM Jaitley denaied

Banks say that the RBI is supplying more currency notes in Rs 100 and Rs 200 denomination while curtailing supply of Rs 500 notes.

As Empty ATMs Reported, RBI Says Shortage Due To Logistical Reasons: 10 Points
Delhi-NCR could soon join the list of states that have been hit with a cash crunch at ATMs. Cash was last supplied to Delhi-NCR banks on Wednesday, April 11, and that too was 30 per cent of the daily requirement.

Further, a month ago, the Reserve Bank of India had disallowed banks from moving excess cash in one circle to deficient circles. As a result, many circles now have excess cash while others have nothing.

Banks say that the RBI is supplying more currency notes in Rs 100 and Rs 200 denomination while curtailing supply of Rs 500 notes.

As per industry standards, nearly 8 per cent of ATMs in India are out of cash at any given point in time. As of now, at State Bank of India (SBI), which has 25 per cent of total ATMs in India, nearly 16 per cent ATMs are dry.

In the last few days, several states, including Andhra Pradesh, Telangana, Madhya Pradesh, Bihar and Karnataka, have reported shortage of cash at ATMs.

Finance Minister Arun Jaitley said the shortage of cash is “temporary” and there is “more than adequate” currency in circulation.

Economic Affairs Secretary Subhash Garg said that printing of Rs 500 notes has been “ramped up”. “There is an unusually high demand for cash since the last two months. We have adequate reserves of Rs 1.75 lakh crore in stock,” he said.

Opposition leaders said that “reports of ATMs running out of cash” is a “reminder of demonetisation days”. “Is there a financial emergency going on in the country,” asked Mamata Banerjee, Trinamool Congress supremo and West Bengal chief minister.

Congress president Rahul Gandhi slammed Prime Minister Narendra Modi for the country facing a demonetisation-like situation again.

NEW DELHI: In response to reports that ATMs in several states are running dry, Finance Minister Arun Jaitley today conceded a “temporary shortage in some areas” and said it was being “tackled quickly”. The Reserve Bank of India said the shortage may be felt in some pockets due to logistical issues and clarified that there is sufficient cash in RBI vaults. Complaints about cash crunch came from Karnataka, Maharashtra, Andhra Pradesh, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana. The opposition has targetted the government, citing the long queues outside ATMs after demonetiaation in November 2016. There have been suggestions that the shortfall could be linked to hoarding, high cash usage for weddings or crop procurement. The finance ministry has roped in the income tax department to pinpoint the reason.
Here are the top 10 points
The RBI said in a statement, “It is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests. Nevertheless, printing of the notes has been ramped up in all the 4 note presses. The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. RBI is closely monitoring both these aspects.”
“Further, as a matter of abundant precaution, RBI is also taking steps to move currency to areas which are witnessing unusually large cash withdrawals,” the statement added.
Union Finance minister Arun Jaitley said: “Overall there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly.”
Economic Affairs Secretary Subhash Chandra Garg told reporters that the government has decided to increase printing of Rs. 500 notes by five times to meet the “unusual” currency demand, reported Press Trust of India. The government, he added, suspects that Rs. 2,000 notes are being hoarded as they are not coming back into the circulation fast enough.
Officials of the Reserve Bank of India, who held a meeting with finance ministry officials, said cash was back in demand and people were hoarding it. “Currency in circulation has not grown despite growth in economy after the demonetisation in November 2016. Currency in circulation on November 4, 2016, was Rs. 17.74 lakh crore. Currency in circulation now stands at Rs. 18.04 lakh crore,” RBI sources said.
State Bank of India chairman Rajnish Kumar said the problem lies largely in Andhra Pradesh, Telangana, Karnataka and parts of North Bihar and it was wrong to call it a currency shortage. “One reason could be that the procurement season has come and the payment to farmers has gone up. In Maharashtra and Mumbai, there is no cash crunch as far as SBI is concerned,” Mr Kumar told NDTV.
Junior finance minister Shiv Pratap Shukla had earlier given a time-frame of three days to resolve the problem. “We have cash currency of Rs. 1,25,000 crore now. Some states have less currency and others have more. The government has formed state-wise committees and the RBI has also formed a committee to transfer currency from one state to other.”
In Hyderabad, many say they have been unable to withdraw cash since yesterday. “We have visited several ATMs since yesterday but it is the situation everywhere,” said one of the residents. A person in Varanasi told news agency ANI, “ATM Kiosks are not dispensing cash. We have visited 5-6 ATMs since morning. We need to pay for the admission of children and groceries.”
The Congress has questioned whether the situation was the result of “gross mismanagement or a deliberate move”. “Modi-ji has destroyed the banking system. Nirav Modi fled with Rs. 30,000 crore and the PM didn’t utter a word. We were forced to stand in queues as he snatched 500-1000 rupee notes from our pockets and put in Nirav Modi’s pocket,” party chief Rahul Gandhi said.
“Seeing reports of ATMs running out of cash in several States. Big notes missing. Reminder of #DeMonetisation days. Is there a Financial Emergency going on in the country?” Bengal Chief Minister Mamata Banerjee tweeted.