ATMs running dry: Unusual withdrawal, hoarding of Rs
2,000 notes to blame?
The government and the Reserve Bank of
India (RBI) have swung into action to address currency
shortages in half a dozen states, caused by an increased demand due to ongoing
crop procurement and the marriage season, besides non-functioning automated teller
machines (ATMs).The Prime Minister’s Office
(PMO) on Tuesday held a meeting with Economic Affairs Secretary Subhash Chandra
Garg and Financial Services Secretary Rajiv Kumar to take stock of the
situation. Finance Minister Arun Jaitley described the cash
crunch as “temporary” due to “unusual” demand in various parts
of the country and said there was adequate supply of cash in the economy.
Opposition leaders attacked the government, saying the “terror of note ban” had
gripped the country and dubbed the situation as a “financial emergency”.The RBI said
there was no shortage of cash, and that logistical issues and a seasonal spurt
in demand for cash were responsible for ATMs drying up in parts of the country.
To meet the demand, the central bank has ramped up the printing of Rs 500
notes. “The shortage may be felt in some pockets largely due to logistical
issues of replenishing ATMs frequently and the recalibration of ATMs being
still underway. The RBI is
closely monitoring both these aspects,” the central bank said, adding it was
“also taking steps to move currency to areas that are witnessing
unusually large cash withdrawals.”Top government officials cited
several factors for the sudden spurt in demand for cash, including agricultural
and marriage seasons and fear among citizens in some states due to the
Financial Resolution and Deposit Insurance (FRDI) Bill, which has proposed a
‘bail-in’ clause to bail out stressed banks.
Finance
Minister Arun Jaitley said the cash shortage was caused by an unusual spurt in
demand in the last three months, and the “temporary shortage” in certain states
is being “tackled quickly” and that there is “more than adequate” currency in
circulation.
Even as a senior Bharatiya Janata Party (BJP) leader
cautioned the media against spreading panic, Communist Party of India (Marxist)
leader Sitaram Yechury said: “ATMs were empty in November 2016. ATMs are empty
now. The only party flush with cash is the BJP.” Yechury said the country is
still paying the price of “a sudden midnight order of demonetisation”.
Yechury said demonetisation did not achieve of any of its
stated objectives, including elimination of terrorism and fake currency. “But
it has killed the Indian economy. The cash crisis tells us how Modi’s
demonetisation disaster is still wreaking havoc,” he added.
Congress leader Ashok Gehlot said: “Modi government has
ruined the banking system of the country and people have lost their faith in
it.”
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