India Sees Record Cash Circulation Amid ATM Shortages

Cash Shortage Threatens ATM Services in India

The Confederation of ATM Industry (CATMi) has warned the Indian Banks' Association (IBA) of a potential disruption in ATM services in India due to a cash shortage. According to a letter sent to the IBA, CATMi members are facing difficulties in drawing cash for ATM loading from bank branches and currency chests across several states.

Cash Loading Falls Short of Requirement

The intended cash requirement for ATMs stood at Rs 94,000 crore in March and April, but the available cash was Rs 61,000 crore in March and Rs 54,000 crore in April. This translated into fulfillment levels of 64 percent in March and 57 percent in April, indicating a significant shortfall in cash availability.

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Industry Under Pressure

CATMi represents companies that support the ATM network, including ATM manufacturers, outsourcing firms, white-label ATM operators, payment service providers, cash replenishment agencies, cash-in-transit firms, and ATM security service providers. The cash availability issue has come at a time when the ATM industry is also dealing with cost pressures and falling transaction volumes.

ATM Contracts and Transaction Decline

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ATM contracts had been structured around a modest annual decline of 2.5-3 percent in transactions, with consumer price index-linked escalation expected to absorb the fall. However, transactions declined 10.40 percent over the year, according to industry sources.

Rise in Currency in Circulation

Despite the decline in ATM transactions, currency in circulation remains high. As of May 22, currency in circulation stood at Rs 42.54 trillion, representing a 12 percent year-on-year growth and 11.9 percent of gross domestic product.

Fee Hikes and Digital Shift

ATM usage has been affected by fee changes and the shift towards digital payments. The charge paid by customers for ATM transactions beyond the free limit was raised to Rs 23 in May last year from Rs 21. While the increase made each extra withdrawal costlier for customers, it also pushed more users towards digital channels.

Warning Matters for Cash Access

CATMi has warned that the shortage of cash available for ATM loading could affect services, particularly in rural and semiurban areas. The industry body said ATMs are used as withdrawal points by direct-transfer beneficiaries, making cash availability at ATMs relevant for users who depend on physical currency for everyday transactions.