The unexpected demonetisation by the government on 8 November has thrown normal life out of gear for those falling under the lower income group across the country.
While the government has justified its decision by saying it is required to flush out the black money and fake currency in the system, there is growing frustration among the common man that this is putting them in a difficult situation while the actual targets are escaping the onslaught anyways.
The demonetisation of high value currencies - the ban on use of Rs 500 and Rs 1,000 - have resulted in a cash crunch as the decision was taken before equipping the banks with the new currency notes.This has resulted in long queues at ATMs and bank branches as worried customers are thronging to exchange or deposit their old cash and withdraw money.
As the chaos seemed spiralling out of control on Saturday, finance minister Arun Jaitley held an emergency meeting with top officials at his ministry and banks and also briefed the media about the unfolding situation.
Here are all the key details you need to know about the ATM cash crunch:
What is the reason for the cash crunch at ATMs?
The banks have not yet got the required amount of currency notes to replace. Moreover, as the dimensions of the new notes have changed, the ATMs need to be recalibrated to dispense these notes.
Justifying the decision, the finance minister on Saturday said the ATMs could not be recalibrated earlier because then the operation would not have remained a secret. According to him, about 2 lakh ATMs have to recalibrated and this requires thousands of people on the job. So the recalibration could be done only after 8 November. Recalibration (requires both software and hardware changes) and needs thousands on job. "Presently only Rs 100 notes are being disbursed from the ATMs. Out of 2 lakh ATMs, about 1.2 lakh are operational," a statement from the finance ministry said.
Customers are withdrawing cash in hoards from ATMs ans the replenished notes are finished in no time.
So the cash crunch presists.
When is this expected to be normalised?
The ministry says the recalibration of ATMs is going on. It will be completed by end of this month or early December. Only then can denominations other than Rs 100 be disbursed by ATMs.
What has been the experience until now?
The ministry said that a total of over seven crore transactions have taken place in less than three days after the demonetisation was announced.
"A total of over 7 crore transactions have taken place from November 9 up to mid-day of November 12 (i.e. in the last two and a half days) for deposit, exchange of old notes and withdrawal from ATM and over the counter," it said.
"Old notes of Rs 500 and Rs 1000 denominations amounting to about Rs 2 lakh crore have been deposited to banks," it said.
Rolling out the numbers of SBI, Jaitley said on Saturday that there has Rs been Rs 2.28 lakh crore worth transactions in SBI. As the bank is the largest in the country in terms of operation and constitutes 20-25 percent of total banking operations in the country, this can be extrapolated for other banks. Monetary transaction in SBI in the past until 12 pm on Saturday was Rs 54,370 crore. Of this cash deposits alone were Rs 47,868 crore. SBI has had in two-and-half days 58 lakh people coming for exchange of notes, 22 lakh for ATM operation and 33 lakh for withdrawals.
What is the government saying?
"There is sufficient cash available with RBI and Banks. They were advised step up the supply of cash to the public," said the ministry statement.
The availability of cash and issuance of cash to bank branches and post offices on a daily basis is being constantly monitored and necessary rebalancing being done for more efficient allocation of banknotes of requisite denominations between different areas, it said.
Jaitley at the press conference said there are 4,000 currency chests and cash is sufficient to meet the demand.
The RBI said in a notification allaying fears: "Keeping in mind the need for other denomination notes which are legal tender (including ₹ 2000), adequate stocks of these notes are kept ready in the Currency Chests located at more than 4,000 places across the country. Bank branches are linked to them to source their requirements from them. To sustain the demand, Printing Presses are printing the currency notes at full capacity so that adequate quantum of notes is available.
"While these efforts are afoot, public are encouraged to switch over to alternative modes of payment, such as pre-paid cards, Rupay/Credit/Debit cards, mobile banking, internet banking. All those for whom banking accounts under Jan Dhan Yojana are opened and cards are issued are urged to put them to use. Such usage will alleviate the pressure on the physical currency and also enhance the experience of living in the digital world.
To cater to the requirement of rural areas, banks were advised to supply notes of smaller denominations (Rs 100 and less) as well as Rs 10 coins, it added.
RBI has been advised by the government to set up a special cell to monitor the receipt of fake currency notes and inform such instances to the Economic Offences Wing of the state police, enforcement agencies of the Central Government and also to the Ministry of Finance.
"The law enforcement agencies have also been advised to maintain close vigil over possible movement of fake currencies and take prompt action as and when such cases are detected by them as well as by RBI and banks," the ministry statement said.
Published Date: Nov 13, 2016 11:03 am | Updated Date: Nov 13, 2016 11:03 am