Cash Crunch In ATM Reported Across India, FM Jaitley Says Action Being Taken To Ensure Availability
In the last couple of months, reports surfaced about a severe cash crunch in Telangana and Andhra Pradesh. Cash was being shipped from Kerala to fill up dry ATMs in these two southern states. Now, reports show that eastern Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Bihar and Gujarat are facing a similar situation. The situation is a reminder of the days following demonetisation.
The government is checking with the Reserve Bank of India (RBI) to find out whether there is adequate currency in circulation, reported Economic Times. Many people have taken to Twitter to narrate their ordeal.
#ATM‘s in Delhi, Madhya Pradesh, Patna Chandigarh, Lucknow, Telangana facing cash crunch. Many ATM’s have put No Cash notices. MoS Finance @BJPShivPShukla agrees there is crunch, blames RBI for giving more cash to some states and less to others @News18India
— Kirandeep (@raydeep) April 17, 2018
The Finance Minister in a tweet blamed the sudden and unusual withdrawal of cash to be the reason behind the crunch. “We have cash currency of Rs 1,25,000 crore right now. There is one problem that some states have less currency and others have more. A panel has been formed and the matter will be fixed in three days,” said SP Shukla, Mos Finance.
Have reviewed the currency situation in the country. Over all 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.
— Arun Jaitley (@arunjaitley) April 17, 2018
MP CM Shivraj Singh Chouhan sees a conspiracy behind the cash crunch, while addressing a farmer’s convention in MP on Monday, he said, “16.5 lakh crore notes were printed & circulated in markets, but where are Rs.2000 notes going? Who is trying to create a cash crunch? This is a conspiracy to create problems & state govt will take strict action on it, we are in touch with centre also”.
— NDTV (@ndtv) April 17, 2018
Reasons for cash crunch in the southern states
People in these States are going for bank-runs. They have been going to the banks and withdrawing cash with the fear that the banks might collapse because of the number of scams that are coming out and also because of the “bail-in” clause in the controversial Financial Resolution and Deposit Insurance (FRDI) Bill, 2017.
Another reason for cash crunch is the deliberate hoarding of Rs 2000 notes. While the cash put out for circulation by RBI and government is adequate enough, bankers believe that people are hoarding 2000 notes. According to RBI data, currency in circulation as on April 6 was Rs 18.17 lakh crore, which is close to the number at the time of demonetisation. While the growth in currency has been almost flat (compared to the day before demonetisation), the need for currency has shrunk considerably because of the high level of digitisation.