The currency shortage that was first reported in Andhra Pradesh and Telangana has now spread to several parts of the country, prompting government and the Reserve Bank of India (RBI) to swing into action. News reports from various states, including Andhra Pradesh, Madhya Pradesh, Telengana, Maharashtra and Bihar, said that automated teller machines (ATMs) were facing a cash crunch. The RBI said it had ramped up printing of notes despite having sufficient cash in its vaults and currency chests.
Currency withdrawal by individuals during January-March 2018 was at 1.4 trillion rupees, sharply higher than 1.1 trillion rupees in the same quarter of 2016, according to Reserve Bank of India data. The March 2017 quarter data is not comparable as the RBI was in the process of re-injecting currency notes after the so-called demonetisation in November 2016. While it is difficult to trace any specific reason for such massive cash withdrawals this year, analysts say that concerns over the health of India’s banking system has also triggered savers to withdraw cash. The government also dismissed concerns over a lack of adequate supply of the high-value 2000 rupee note while acknowledging early signs of hoarding.
By: Swati Kaushal