Nearly three weeks after the Reserve Bank of India (RBI) lifted cash-withdrawal limits imposed in the wake of demonetisation, ATMs continue to run dry in several locations.

Even though cash supply has improved, the availability of lower-denomination notes of Rs500 and Rs100 is insufficient. According to the latest RBI data, currency in circulation had fallen to Rs13.12 trillion as of 24 March from Rs17.97 trillion on 4 November. But the pace of remonetisation has slowed down.

“There has been a steep fall in currency production. Earlier, if the presses were printing 150 million pieces of all denominations a day, it has now fallen to 110 million pieces," a senior bank official said, declining to be named. “Workers have gone back to their earlier schedule. They are no longer working on 12-hour shifts."

ATM operators were expecting the situation to normalize after the recent assembly elections, but that has not happened. According to CMS Info Systems Pvt. Ltd, the largest ATM operator, customers continue to withdraw a little more than what they actually need because of scarcity of currency notes.

“Within the CMS network, we are seeing that approximately 85% of ATMs are being replenished on a daily basis. However, we are also loading around 30% less than what we used to per ATM, and seeing around 9-10% of ATMs remaining dry (over 10-day periods)," said CMS spokesperson Sandhya Menon.

ATM operators point out that the paucity of Rs500 and Rs100 notes in ATMs have led to a drop in cash withdrawals. “Lower-denomination notes are still not available and therefore people are hesitant to withdraw higher-denomination notes," said Ramaswamy Venkatachalam, managing director, India and South Asia, FIS, an ATM manufacturer.

A State Bank of India report released on Monday also highlighted this trend. According to this report, cash withdrawals have been declining rapidly from a peak of Rs52,800 crore for the week ended 13 January to Rs32,500 crore for the week ended 24 March. “The decline in cash withdrawals is intriguing even as limits on withdrawals have been removed completely from 13 March. Historically, average withdrawals are generally higher in the first fortnight of a month because people tend to spend more in the first fortnight," the report added.

However, if cash withdrawals are indeed falling, then the recent RBI data should point to a surge in digital transactions. But data as of 26 March shows that transactions have fallen to 497.2 million from 684.66 million in February.

It is, however, clear that the process of remonetisation is expected to take more time. The printing of new notes is expected to fall further in the coming days as the army deployed to help with printing is set to be withdrawn from the process, said the bank official cited earlier. “Six to seven billion new notes of Rs500 have been replaced so far. Around 10 billion new notes need to be printed to reach the pre-demonetisation levels. This is likely to take another 10 months," the person added.

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