Shortage of Rs 2,000 notes after supply from Reserve Bank dips in recent weeks
A shortage of Rs 2,000 notes in recent weeks and months has stumped bankers and ATM operators who are already grappling with cash shortage in some parts of the country due to heavy usage and hoarding.
Bankers and ATM service providers say that there has been a sharp drop in number of ` . 2,000 notes in circulation. Supply of new notes from the central bank has plummeted in recent weeks leading to speculation that it could be a deliberate strategy to restrict the flow of high-value notes in the economy .
“Presently we are receiving currency notes from the Reserve Bank in denomination of Rs 500 in high-va lue currency,“ said Neeraj Vyas, chief operating officer of State Bank of India. “The 2,000 denomination notes are coming over the counters by way of recirculation.“ There are around 58,000 ATMs of SBI out of the 2.2 lakh deployed in the country. The country's biggest bank has also moved a step ahead of its peers to recalibrate the Rs 2,000 currency cassettes in a few of its ATMs to Rs 500 currency ones so that more cash can be stuffed inside the machines.
An email sent to RBI seeking comments was not answered till the time of going to press.
But the central bank continues to pump in Rs 500 currency notes ensuring that there is no overall cash crunch which was seen during demonetisation last year.Bankers say that this could be part of the strategy of the RBI to keep a leash on the total amount of highvalue currency in circulation.
“While there is a definite shortfall in the supply of Rs 2,000 denomination notes, overall supply is fine as banks are giving out sufficient Rs 500 notes which is convenient for the consumer as they can get change easily for smaller currency notes,“ said Ravi Goyal, managing director of AGS Transact Technologies which manages around 60,000 ATMs in the country on behalf of banks.
The RBI rushed to print Rs 2,000 notes immediately after demonetisation was announced in November last year and that supply may have reached a level that the central bank is not comfortable with now, bankers said. This may be a conscious strategy to curb new supply of high-value notes and print more low-value notes like Rs 500 or even Rs 200 which may be introduced soon.
“A new phenomenon that is now happening in the market is that Rs 2,000 notes are not coming in for deployment at ATMs and along with this, we see a 12% increase in the average ticket size of ATM cash withdrawals post demonetisation,“ said Loney Antony, managing director of Hitachi Payment Services which mana ges more than 50,000 ATMs in the country.
HIGHER NO OF RS 2,000 NOTES ?
Based on RBI data, Hitachi has calculated that notes in circulation with value of Rs 100 and lower crossed Rs 4 lakh crore in May from around 2.5 lakh crore before demonetisation. The Rs 500 denomination went down to Rs 4.1 lakh crore from Rs 8.1 lakh crore in November. The Rs 2,000 denomination dipped to Rs 5.5 lakh crore in May from the Rs 1,000 denomination notes of Rs 6.4 lakh crore in November.
If this calculation is correct, it clearly shows a higher number of Rs 2,000 notes in circulation compared with Rs 500 notes.
“The relevant currency which has come back to be stuffed into cash dispensing machines is still less by around 25%,“ said Antony.“There are still problems of cash hoarding in certain regions of the country.“
Antony was alluding to the fact that the currency in circulation has still not reached pre-demonetisation levels. Latest RBI data shows that the currency with the public is at Rs 14.5 lakh crore as of June 23, six months after demonetisation. This is against Rs 17 lakh crore just before the notes were recalled.
Industry executives who manage ATM networks say they can stuff around Rs 25 lakh in 500 notes in a machine and another Rs 2 lakh in 100 denomination notes, which usually lasts for three to four days depending on the location of the machine.
While that would help make up for some of the Rs 2,000 note shortage, it may not help in cases where cash runs out very fast due to high usage or hoarding. Vyas said that they are finding shortage of cash in cities such as Patna, Kolkata and across the AndhraTelangana region.
The Economic Times, New Delhi, 20th July 2017
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