The banking industry in the country seems to be in trouble again with another Rs 100 crore yet to be invested for the recalibration work of ATMs in order to dispense the new Rs 100 notes across the country. Thus this will become the third such exercise after the demonetization move.
If the cash logistics firms’ and ATM service providers’ warning is to be believed, the latest recalibration procedure may take a long time. So they have asked the government and RBI to make it sure that adequate supply of notes is available to avoid another cash crunch as was witnessed during earlier moves.
The RBI had recently introduced new notes of Rs 500, Rs 2,000 and Rs 200 since the demonetization of old Rs 500 and Rs 1,000 notes in November 2016. But due to the time is taken by the recalibration of ATMs, many regions in the country witnessed a huge cash crunch.
The RBI, while announcing that it is going to introduce new Rs 100 notes in lavender color, said: “As is normal, when a new design of banknote is introduced, printing and supply of these notes for distribution to the public through the banking channel will gradually increase.”
Loney Antony, MD, Hitachi Payment Services, said: “We believe that the exercise involving the new Rs 100 note could cost over Rs 100 crore and take 12 months to completely recalibrate 2.4 lakh ATMs in the country. As the recalibration for the new Rs 200 note is still not completed, the effort for the new Rs 100 note could take longer, unless planned properly.”
The recent introduction of the Rs 200 denomination note is already expected to cost all banks more than Rs 100 crore for ATM recalibration alone. So for this process to be completed, banks had already spent more than Rs 110 crore for recalibration work of ATMs after the introduction of the new Rs 500 and Rs 2,000 notes.
As per the information provided by the RBI, the freshly designed Rs 100 note will be soon in circulation through banking channels first and gradually the printing and supply of the new notes will increase. “It is important to have sufficient supply of Rs 100 and Rs 200 notes to ensure there is enough lower denomination currency in circulation for ease of transactions,” Antony said.
The most disturbing point is that the banks and ATM service providers will have to face a dilemma as the new and old Rs 100 notes will be in circulation all at the same time. “Any change in the size of a currency note will involve recalibration of ATMs, hence we need to recalibrate ATMs for the new Rs 100 note. The question that arises is how do we recalibrate ATMs in terms of new and old notes? Therefore, overall, the continuity of old notes, introduction of new notes through the ATM channel and their availability will determine whether to recalibrate or not,” said V Balasubramanian, director, CATMi & President, FSS.
“While it is great news and very encouraging to have a true Made-in-India and completely indigenous note, the change in dimensions will make dissemination difficult as it will not be available through the ATM channel until all the ATMs are calibrated,” said Himanshu Pujara, MD, Euronet Services India Pvt Ltd.
During the period of January-March 2018, the frequency and the ticket size of all the transactions done at ATMs across the country went up to 10 percent as per the average. This lead to a crunch in many states. Service provider’s version of an explanation for this problem was that the shortage could largely be due to a steep decline in “cash velocity” in those states.
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