Demonetisation type cash crunch hits ATMs; Arun Jaitley reacts, says shortage temporary

Demonetisation type cash crunch hits ATMs; Arun Jaitley reacts, says shortage temporary

The government is checking with banks and India's monetary body Reserve Bank of India to make sure an adequate supply of currency.

The RBI report shows that the currency in circulation has reached the pre-demonetisation level of about Rs 17 trillion. "We have taken steps to raise this production five times", Garg said. "In the first 13 days of the current month, currency supply increased by Rs 45,000 crore".

Shortage of cash has been reported from Gujarat, Uttar Pradesh (UP), Madhya Pradesh (MP), Bihar, Andhra Pradesh (AP), Manipur and Telangana.

With ATMs across west UP districts running dry, residents, particularly in rural areas, are facing severe cash shortages. Nirav Modi fled with Rs30,000 crore and the PM didn't utter a word. While in families preparing for marriage are also facing problem. It has come to light that the government would start printing more Rs 500 rupee notes to tackle the situation but the new notes would take at least a week to be pumped into ATMs, confirmed banking secretary Rajeev Kumar.

Finally, the liquidity issues that were introduced as a result of the Rs 2,000 note could still be lingering, with the reported increase in Rs 100 and smaller-value bank notes not picking up enough slack. "We are not sure if the cash with us would be sufficient to run our operations in the coming days", said a Ravi Ahuja, who runs a small manufacturing unit in Shahadra.

There were rumours that if the Financial Resolution and Deposit Insurance Bill (FRDI) was passed, there would be heavy monetary losses for savers of the bank goes bankrupt. The government said there has been adequate supply of currency notes to meet entire demand.

Amid concerns over cash crunch in ATMs across the country, the government has made a decision to increase printing of Rs 500 notes by five times. "We have visited several ATMs today as well, to no avail".

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That is a source of worry for India's policymakers as a sustained heavy currency withdrawal suggests a return of cash hoarding by individuals, diluting the objective of a massive note ban exercise by Prime Minister Narendra Modi in late 2016. A manager at Agra city branch of Punjab National Bank said, "For the past few days, we are getting up to 40% less cash than what we need".

The SBI chief said it was wrong to call it a currency shortage.

People stand for cash outside at ATM in Bhopal on Tuesday.

"The temporary shortage caused by "sudden and unusual increase" (in demand) in some areas is being tackled quickly", Jaitley said in a tweet.

According to Reserve Bank of India data, currency in circulation as on April 6 was Rs 18.17 lakh crore.

V. Balasubramanian, spokesperson for the ATM industry, said, "ATM service provider do a daily calculation of the cash required which is sent to banks in the night for the next day. The government will act tough on this", the Madhya Pradesh Chief Minister said.