After a hiatus of two days, some automatic teller machines (ATMs) in the country reopened on Friday morning. As cash-strapped consumers queue up outside ATMs in the coming days, for the first time after the government’s decision to scrap old Rs 500 and Rs 1,000 currency notes, some may end up disappointed.
Not all ATMs are fully equipped to handle the new currency system and the transition could take time, the chairman of State Bank of India told reporters on Thursday.
The government has already introduced new Rs 2,000 currency notes, and new Rs 500 currency notes will be circulated in the next few days. But ATMs across the country will dispense only Rs 100 notes for the next few weeks. This means machines will be stocked with less cash overall because of the lower denomination of notes.
Most ATMs will hold only Rs 2-4 lakh since it’s difficult to reconfigure all machines immediately, Anush Raghavan, business head at Securitrans India, a subsidiary of CMS Infosystems (which manages ATMs, among other things), told BloombergQuint. The weekend rush could make it impossible to keep machines working and loaded with cash at all times but demand should ease out from the next week, he added.
With the weekend coming in, there will be high demand for cash. At the gross level, there’s enough currency available but as you go to smaller towns and cities, there might be supply-demand mismatch. A lot of effort is now going into load-balancing for currency across banks and cities to make sure that demand can be fulfilled from places where supply is better.Anush Raghavan, Business Head, Securitrans India
How Long Does It Take To Reconfigure An ATM?
Arundhati Bhattacharya, chairperson of State Bank of India, said on Thursday that reconfiguration of ATMs across the country to dispense new the currency will be a big challenge, and may take at least 10-15 days.
“Reconfigurations, as we have done in the past, takes time. It has to be done one by one,” Bhattacharya said, adding that there are only 3-4 vendors in the country and that they will be hard-pressed to reconfigure ATMs across the country in a short time span.
There are more than 2.01 lakh ATMs in India, according to Reserve Bank of India statistics released in July. Of these, India’s biggest public sector lender State Bank of India operates close to 50,000 machines nationwide.
ATMs in rural areas, where connectivity is a challenge, will be an added concern as banks may find it tough to get new notes in as regularly as they would want to.
At the outset, Securitrans India will reconfigure ATMs in only high-footfall areas. Others will, in any case, need to be reconfigured when the new currency comes in, Raghavan said.
The cash replenishment takes about 20 minutes. On an average, a crew can replenish about 10-15 ATMs per day. The challenge is to reconfigure these ATMs to dispense Rs 100 currency notes. We are identifying ATMs in high-footfall areas to reconfigure them first to increase their stock capacity.Anush Raghavan, Business Head, Securitrans India
What Does Reconfiguration Entail?
ATMs in India usually have 4-5 cassettes which hold different denominations of currency. Most ATMs in the country are configured to hold Rs 100, Rs 500 and Rs 1,000 notes at the same time. Now that only Rs 100 notes are available for dispensing, ATM vendors will have to reconfigure the cassettes to replace them with the ones that can hold Rs 100 notes instead of Rs 500 or Rs 1,000 ones.
Bhattacharya said that it takes three people to reconfigure an ATM, and the crew must travel to each ATM, which is a time-consuming process.
Can Reconfigured ATMs Dispense Cash All Day?
While most ATMs are not calibrated to handle the new denominations yet, there are some which are able to hold and dispense more Rs 100 notes. On 2 November, the Reserve Bank of India asked banks to reconfigure 10 percent of their ATMs to dispense more Rs 100 currency notes.
In keeping with the objectives of Clean Note Policy and to ensure that genuine requirement of members of public for Rs 100 denomination banknotes are met, the banks should increase dispensation of Rs 100 banknotes through ATMs which are widely used for distribution of banknotes for retail use.Reserve Bank of India
RBI’s withdrawal limit is Rs 2,000 per day per card for customers with an upper limit of two withdrawals a week, according to Bhattacharya. Meanwhile, each cassette at an ATM can hold a maximum of 2,250 notes at a time, which implies that four cassettes in total can hold 9,000 notes in. Thus, right now, with Rs 100 currency notes, only a total of Rs 9 lakh can be held in one ATM at any given point.
This will mean that ATMs will run out of cash much faster. Earlier, they could store up to Rs 12 lakh under normal circumstances and Rs 24 lakh in special areas with the RBI’s permission.
When Can The Situation Return To Normal?
If ATMs continue to hold just Rs 9 lakh at any one time, multiple re-fillings might be required which will increase cost for banks and inconvenience for customers as loading fresh currency will mean that an ATM will be out of order multiple times during the day.
Moreover, the vans rushing to ATMs on Friday and over the weekend will have the enormous task of unloading old currency notes stocked inside the ATMs and install new cassettes to handle Rs 100 notes.
The SBI chief expects the process of replenishment and reconfiguration to be completed in 10-15 days.
But banks have a long and arduous job ahead as ATMs will need to be reconfigured once again when Rs 2,000 and new Rs 500 currency notes are printed in enough quantities to then be dispensed through ATMs.