Cash not dispensing from ATMs; RBI takes action and seeks reports from banks, but one specific issue has sparked concern..
Recently, when Ramesh Gupta—who works for a private firm in Noida—visited his hometown and went to a local ATM to withdraw money, he found an "Out of Cash" sign hanging there. He returned disappointed from the second and third ATMs as well; it was only at the fourth ATM that he managed to withdraw cash. Ramesh is not the only one facing this issue; you, too, may have experienced this recently. We have received similar complaints from many people stating that ATMs in several cities often run out of cash. Reports from June also indicated that ATMs in Tier-II and smaller cities were grappling with cash shortages. This problem has persisted for about three months.
In light of the persistent cash shortage in ATMs across many cities, the Reserve Bank of India (RBI) has swung into action. Our sister website, NDTV Profit, citing sources familiar with the matter, reported that the central bank has begun assessing cash availability across various bank branches and ATM networks.
**Severe Shortage in Small Cities; SBI Customers Also Facing Trouble**
The RBI, as the banking regulator, is reviewing the cash inventory levels that banks are mandated to maintain. This move comes after significant lapses were observed in cash replenishment for ATMs in many Tier-II and smaller cities. According to sources, customers of several banks—including the State Bank of India (SBI)—have lodged complaints about ATMs running dry (being out of cash) during this period.
**RBI Seeks Details from Bank Branches**
Sources indicate that the RBI has sought details regarding cash inventory from bank branches to determine whether banks are holding sufficient cash to ensure timely loading of their ATMs.
Sources added that if banks are found failing to ensure adequate cash availability across their ATM networks, the RBI might adopt a strict stance on the matter.
**Impact on Cash Management Companies**
The issue of ATMs running out of cash has also affected cash management companies. These companies have suffered business losses because banks failed to supply sufficient cash for loading into ATMs.
Banks' Argument: 'Soiled and Mutilated Notes' Are Also Part of Inventory
On the other hand, bankers argue that the figures regarding cash inventory maintained at branches can be misleading. This is because these figures include soiled, mutilated, and unfit notes that cannot be immediately loaded into ATMs. Consequently, the actual stock of 'fit' currency available for ATMs may be significantly lower than the total figures suggest.
Industry executives also pointed to structural challenges within the ATM business. According to bankers, ATM operations are rapidly becoming a cost-intensive business, while the incentives provided for maintaining and expanding ATM networks remain inadequate. This has diminished the commercial appeal of this business for banks.
States with the Highest Number of Empty ATMs
The 'Confederation of ATM Industry' (CATMi) had previously raised this issue with banks. In June, the industry body wrote to the 'Indian Banks' Association' (IBA), urging banks to ensure the availability of sufficient cash for ATM replenishment.
According to CATMi, the level of ATM cash fulfillment ranged between only 57% and 64% during April and May, indicating that a significant portion of the cash demand remained unmet. The industry body stated that the highest number of instances of 'dry ATMs' (empty ATMs) during this period were recorded in Karnataka, Andhra Pradesh, and Telangana.
Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
