- RBI is assessing cash availability in bank branches and ATM networks across India
- Several tier-II and smaller cities faced acute ATM cash shortages over the past three months
- RBI seeks details on cash inventories to check if banks replenish ATMs timely and adequately
The Reserve Bank of India (RBI) has begun assessing cash availability across bank branches and ATM networks following reports of recurring cash shortages in several parts of the country over the past three months, according to people familiar with the matter.
The central bank is reviewing cash inventory levels maintained by banks after a number of tier-II and smaller cities experienced acute shortages in ATM cash replenishment. Customers of the State Bank of India (SBI), among others, have complained of finding ATMs without cash during the period, the people said.
The RBI is understood to have sought details of cash inventories at bank branches to determine whether lenders are maintaining adequate cash to replenish ATMs in a timely manner. The regulator is expected to take a strict view if banks are found to have failed in ensuring sufficient cash availability at their ATM networks, the sources added.
The issue has also affected cash management companies, which have reported business losses as ATMs remained dry due to inadequate cash supplied by banks for replenishment.
Bankers, however, said that cash inventory figures maintained at branches can be misleading as they also include soiled and unfit currency notes that cannot be immediately deployed for ATM replenishment. As a result, the effective stock of fit currency available for ATMs may be significantly lower than headline inventory numbers.
Industry executives also pointed to structural challenges in the ATM business. According to bankers, operating ATMs have increasingly become an expenditure-heavy business, while incentives for maintaining and expanding ATM networks have remained inadequate. This has reduced the commercial attractiveness of the business for banks.
The Confederation of ATM Industry (CATMi) had earlier flagged the issue with lenders. In June, the industry body wrote to the Indian Banks' Association (IBA), urging banks to ensure adequate cash availability for ATM replenishment.
According to CATMi, ATM cash fulfilment levels ranged between 57% and 64% during April and May, indicating that a significant portion of cash requirements remained unmet. The industry body said Karnataka, Andhra Pradesh and Telangana recorded the highest incidence of dry ATMs during the period.
The RBI and SBI did not respond to NDTV Profit's queries till the time of publication.
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