ATMs go dry, Cash crunch is back


Sources in the finance ministry said the cash crunch was not alarming and there was no need to panic.

On Monday, Madhya Pradesh Chief Minister Shivraj Singh Chauhan claimed there was a conspiracy behind Rs 2000 notes disappearing from the market. When the cash shortfall was reported from Andhra Pradesh and Telangana in March, it was attributed by some to a misunderstanding of the Financial Resolution and Deposit Insurance Bill, which had a "bail in" clause where depositors would bear a portion of any losses. Reserve bank has already formed the committee to transfer currency from one state to other. "We are facing a situation similar to the government had scrapped 500- and 1000 rupee notes that triggered a cash shortage", he said. This is a conspiracy to create problems and state government will take strict action on it.

The Centre on Tuesday admitted to the cash crunch and blamed it on uneven distribution of currency by the RBI across states.

The reason for the cash crunch this time could be the lack of higher denomination currency notes needed to pay harvest season wages.

From Varanasi in Uttar Pradesh people said, "We do not know what or where the problem is but the common man is facing difficulty as the ATM Kiosks are not dispensing cash".

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In UP capital Lucknow, two ATMs near the RBI office in Gomti Nagar have no cash in them.

Taking cognizance to the cash shortage issue Finance Minister Arun Jaitley posted a tweet saying the government has reviewed the currency situation in the country.

"We have visited five-six ATMs since morning".

"The temporary shortage caused by "sudden and unusual increase" in some areas is being tackled quickly", he added. "Banks have been advised to optimize cash flow at ATMs well". The ministry officials also held consultations with state officials and bank heads in the wake of shortage of cash.

He was referring to news reports of ATMs running out of cash at some places in the state. However, as several ATMs ran out of cash on Sunday, people ended up running from one ATM to another, to make cash withdrawals and their expenses. After the demonitisation exercise, the currency in circulation increased to Rs. 16,50,000 crore. "But notes of Rs 2,000 are missing from the market". The situation has been the same since 15 days. "We are facing a cash crunch".