Economy likely to be severely affected; RBI spokesperson says notification not in public domain
Banking regulator Reserve Bank of India has begun restricting the flow of fresh currency notes to banks operating in Jammu and Kashmir which is likely to hit the state’s economy severely, a top banking functionary said on Tuesday.
The functionary, who insisted not to be named because he wasn’t authorised to speak to media, said that automated teller machine (ATM) transactions are the worst-hit because the RBI has reduced the number of high denomination Rs 500 and Rs 2000 notes to banks operating in “border states such as J&K.”
“J&K has a cash requirement of Rs 700 crore but we receive only Rs 200 crore at the moment. The problem has been prevalent for the past one month and is proving to be severe now. During ATM transactions, customers are able to withdraw only low denomination notes. We receive several customer complaints in this regard,” the banking functionary, who was seconded by his colleague, said. In absence of high denomination currency notes, the cash in ATMs is getting exhausted soon despite regular refilling.
“This is essentially due to presence of low denomination currency notes. We have written to the RBI about this sudden reduction of cash flow because of which the end customer is getting badly affected. The RBI is just going back and forth on the issue and not giving any concrete response,” the functionary said, adding that despite a major drop in cash flow, “we are ensuring that ATMs with exhausted cash are refilled on a regular basis but we are helpless beyond a point.”
There are a total of 1050 ATM kiosks of the J&K bank in the state while rest of the banks have 1382 ATMs.
An official said that mostly low denomination currency notes such as Rs 100 are available with banks, leading to ATMs “running dry” every now and then.
“The capacity to load cash in ATMs has also reduced due to presence of low denomination currency notes. With an adequate flow of cash, an ATM can accommodate Rs 30 lakh to Rs 40 lakh cash at a time but with the cash cut, we are able to accommodate only Rs 5 lakh to Rs 7 lakh cash in an ATM,” the official said.
He said that due to shortage of cash in ATMs especially the high denomination currency notes, customers are forced to visit bank branches, thus increasing the rush there.
“It is ironical that on the one hand the RBI is promoting digital banking and ATM usage, but on the other, it is clipping our wings by restricting the cash flow. If this policy decision is not revoked, we will be economically crippled soon as it has already started affecting the people’s daily lives,” the banking official said.
When contacted, RBI spokesperson Alpana Killawala claimed that there was no official notification with regard to “restriction of cash flow”.
“This is not in the public domain and there is no official notification as of now. I will need to check and get back to you on this,” Killawala said.