MUMBAI: The internet shutdown in parts of Uttar Pradesh due to the protests over the Citizenship Amendment Act has hit banking services, including movement of cash and branch operations. Bankers told ET that transactional services had come to a halt, and merchants were finding it hard to conduct business.“We have seen our business in certain parts of UP being hit due to internet closure because our businesses are online-based. Several merchants haven’t been able to carry out transactions,” said Rishi Gupta, CEO, Fino Payments Bank. “There has also been a problem in moving cash to sensitive areas, and we hear that a few bank branches have been shut down.”Violent protests against the Citizenship Amendment Act (CAA) have led to statewide imposition of prohibitory orders under Section 144, heavy deployment of forces and shutdown of internet in several areas of UP.Across the state, 879 people have been arrested in connection with the violence while 5,000 have been detained, as per official figures. The worst-hit are Lucknow, Kanpur, Varanasi, Meerut, Bahraich, Agra, Firozabad and Gorakhpur Some banks are reported to have closed branches and stopped dispatch of cash to sensitive areas.“While in most areas the disruptions were temporary, availability of cash was an issue for many people, even though most ATMs run on VSAT (very small aperture terminal) connections,” the CEO of an ATM services company told ET on condition of anonymity. “While we understand the necessity for the shutdown, the cost of inconvenience is rather high.”Basic banking such as cash disbursal by ATMs, digital banking transactions, OTP-related services including electronic KYC (know your customer) verification, remittance transfers and UPI ( Unified Payments Interface ) and AEPS (Aadhaar-Enabled Payment System) have been impacted, said market stakeholders.“The Aadhaar-Enabled Payment System has been severely affected. Our members on the ground have written to us, but the exact extent of the impact is not yet clear,” said Anand Srivastava, founder of financial services provider Beam.“AEPS is used at kirana stores, groceries, medical stores and by Business Correspondents (BCs). Uttar Pradesh is a heavy user of this platform. We will analyse the situation in depth and write to both the National Payments Corporation of India and the Unique Identification Authority of India, as well as ministries, regarding the situation,” said Srivastava, who is also the chairman of the Business Correspondent Federation of India.“We’ve seen an impact on business in several small pockets across the country, which could be because of the internet shutdowns,” said a senior official with a leading payments company. “The impact is more on the merchant side of the transaction activities.”According to data sourced from government database Digidhan, per capita UPI transaction rate in Uttar Pradesh till November 30 stood at 6.243 — which means an average user transacted six times a month. The rate for Assam and Jammu and Kashmir was much lower — at 0.663 and 0.727, respectively. Both these states have also seen internet shutdowns.As on September 30, Uttar Pradesh had 21,098 ATMs. The average replenishment rate was Rs 1.36 crore per ATM in June — the highest in the country, according to data sourced by ET from CMS Info, an ATM management company. Replenishment can be used as a proxy for cash demand per ATM.“Whenever it (internet shutdown) happens, people get impacted,” said a senior executive with a tech-enabled nonbanking financial company. “Just as roads and highways are essential for running the economy, internet availability is also important, in view of the increased shift towards digital transactions. The cost of disruptions (due to internet shutdowns) is as high as the cost of shutting other forms of physical infrastructure (such as roads and highways).”