Even At 12,000 ATMs A Day, It Will Take 2 More Weeks To Calibrate All Machines

The aftermath of the government’s demonetisation drive has been marked by serpentine queues outside automated teller machines. The rush to withdraw cash far outstrips the regularity with the machines can be refilled.

The problem, however, is that a large chunk of ATMs in the country can only dispense Rs 100 notes now after the government withdrew all Rs 500 and Rs 1,000 notes on November 8. Cash management agencies say they are working round the clock to calibrate ATMs so that they can start dispensing new Rs 500 and Rs 2,000 notes quickly, thus allowing more money to be stocked in each ATM.

The task of calibration is picking up pace after the Reserve Bank of India set up a task force with industry members, and cash management companies are calibrating more than 12,000 ATMs per day, according to Rituraj Sinha, a member of the RBI committee and President of the Cash Logistics Association of India.

What Sinha said was corroborated by Rajiv Kaul, executive vice chairman and chief executive officer of CMS Info Systems, India’s largest cash management company which manages about 52,000 ATMs. Kaul said that on Wednesday, 12,500 ATMs were recalibrated but the task will take about 18-20 days assuming that the work continues at similar speed.

More than two lakh ATMs across the country need to be recalibrated to dispense the new Rs 500 and Rs 2,000 notes as they differ in size and thickness, and according to cash management companies, this process takes about 30 minutes per ATM.

Sinha, meanwhile, said that the situation is likely to ease soon as more calibrations are done which will allow ATMs to hold much more cash.

“Most ATMs are dispensing Rs 100 notes which means that we can put a maximum of Rs 4-5 lakh at a time in a machine,” he said. “This can only serve the first 200 customers or so and the ATM runs dry. As soon as the calibration is done, we will be able to put up to Rs 60 lakh per ATM which can then service more than 3,000 people.”

However, the problem is exacerbated because a large number of the ATMs are not being supplied with cash quickly enough, according to Kaul.

Kaul clarified that a large number of ATMs are directly managed by banks, because they abut the bank branches, and banks themselves are responsible for restocking these.

The government and RBI on their part are trying to assuage citizens, saying there is enough cash in the reserves and customers do not need to hoard. However, on Tuesday, the government decided to postpone raising the withdrawal limit from automatic teller machines to Rs 4,000 from Rs 2,500 currently, citing the slow progress of recalibrating ATMs. The earlier withdrawal limit of Rs 2,000 applies to all ATMs which have not yet been recalibrated.

There are, however, other concerns that cash management system companies are dealing with. The process of collection of cash from bank branches has not yet been streamlined despite efforts by the industry and meetings with banks and the Reserve Bank of India, said Kaul.

This, according to Kaul, is a security concern, as there have also been some stray incidents where people standing in line at ATMs have attacked cash officers because there wasn’t enough money.

Sinha, meanwhile, contended that there’s no cash shortage at all in the country. He added that it’s much more of a logistics issue than a currency issue which is why employees across the sector are forced to work long shifts through the day to ensure cash supply to ATMs doesn’t stop.