Even as the government and the RBI have assured the public that there was no currency shortage, unusual spurt in demand for currency led to many ATMs and banks running out of cash in Uttar Pradesh, Madhya Pradesh, Karnataka and few other states.
Suspected hoarding of Rs 2,000 notes was cited as a reason by the government for the current situation. On the other hand, the RBI said logistics and recalibration issues were limiting replenishments of ATMs, media reports said.
The government, meanwhile, said printing of Rs 500 denomination notes would be increased five-fold and notes worth Rs 70,000-75,000 crore would be printed in a month while the RBI has ramped up printing at its notes presses, reported PTI.
Economic Affairs Secretary S C Garg reportedly said the printing of Rs 2,000 notes have been halted for the past few days as there is an “over supply”, adding that currencies of lower denominations are also in over supply.
There is around Rs 7 lakh crore worth of Rs 2,000 notes in circulation. A statement from the Finance Ministry confirmed reports of cash shortages and some ATMs running dry or becoming non-functional in some parts of the country, the report said.
“There has been unusual spurt in currency demand in the country in last three months,” it said.
While currency supply increased by Rs 45,000 crore in the first 13 days of April, “unusual spurt in demand” was seen more in some parts of Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar, the statement said. Seeking to assure the public, Finance Minister Arun Jaitley was quoted as saying that he has reviewed the situation and the government would fix the problem quickly.
“Overall there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by sudden and unusual increase (in demand) in some areas is being tackled quickly,” Jaitley , who has been away from office since April 2 due to a kidney ailment, said in a tweet.
Government officials attributed the cash crunch to crop procurement and hoarding of high denomination currency ahead of elections in Karnataka, reported PTI.
The currency problem originated in the southern states and may have been fuelled by rumours that money in banks is not safe due to a certain provision in the proposed Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, officials reportedly said.
