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ATMs running low on Rs 500, Rs 100 notes, white label operators suffer

March 27, 2017 / 03:52 PM IST

Even as long queues seen during the demonetisation period have disappeared, ATMs are still running out of low denomination currency.

While cash withdrawal limits have been entirely lifted both at ATMs and bank branches, the ATMs, especially at non-commercial, suburban and tier-2/3 regions, are running out of currency, largely of Rs 500 and 100 rupee denomination notes.

An executive with a cash logistics firm said, “Now, about 90 percent of the ATMs are being loaded on a daily basis and we get 90 percent of the value that we ask from banks but the challenge exists on the denomination mix. They run out of the required currency as there is more supply of 2000 notes and 500 supply is limited. Customers want more of 500 and 100 rupee notes and the 100 rupee notes get exhausted quickly while 2000 are not wanted. Banks and the RBI are working to normalise things in 2-3 weeks.”

Navroz Dastur, CEO and MD of NCR Corporation, which has deployed over 50 percent of the ATMs in the country, said, “Technically, ATMs are not out of cash but the challenge is that 2000 rupee notes are not much wanted by the people. Also, we are not getting the good quality or the ATM-fit 100 rupee notes because there could be some hoarding and also some supply issues as well.”

Overall, Dastur says the industry is facing occasional shortages but more or less the average number of transactions have come back to more or less normal levels prior to demonetisation.

Close

Sejal, a resident of a Mumbai suburb in Borivali said, “Last Sunday, I had no cash at all and I visited four ATMs, all of which could dispense 2000 rupee notes. After some running around, luckily I got a change against one 2000 note from a general store.”

Similarly, another resident living about 25 kms away said, “Most ATMs dispense only Rs 2000 denomination notes. Hence, I prefer to withdraw at the ATMs near my office in the town side which mostly manage to have adequate currency notes.”

Bankers say they are filling the ATMs where they see the largest usage which could be commercial office areas and the more densely populated locations. “There could be some off-site ATMs in not-so-populated locations, especially the rural areas which might get adequate loading in the next 2-3 weeks,” said a banker with a large public sector bank.

This has also slowed further deployment of ATMs with just about 1400 new ATMs deployed between October 2016 and January 2017 as compared to over 5,000 opened in the same period a year ago, as per the Reserve Bank of India data.

White Label ATMs bear the brunt

One of the biggest casualties of demonetisation was the already struggling white label ATMs (WLAs), who saw a major setback in their business with their ATMs entirely shut till January this year. In the last 35-40 days, they have seen about 60-70 percent of the ATMs in operation.

K Srinivas, MD and CEO of BTI Payments, a white label operator with 4,200 ATMs in Tier-3 and rural areas, said, “We get cash from banks but banks have to first meet their own ATMs. Since mid-January, we are able to run about 70 percent of our ATMs daily but still have three key problems -- One is that we need about 90-100 crore daily but we get about 60-65 crore, so manage to get about 60-65 percent of the indent. The second issue is availability of the right denomination as we get more of 2000 rupee notes and less of 500 and 100 rupee notes. Our ATMs are predominantly in the tier-3 and below regions and 2000 is hardly of use to the customers there."

Third, he said the supply of cash from over 200 locations before demonetisation has come down to 100 locations now which requires them to transport cash to more locations with less availability of armed guards and adequate number of vehicles.

“It becomes expensive and so not really practical. The RBI has helped but we still have some distance to go,” he added.

WLAs are owned, managed and operated by non-bank entities. In 2014, the RBI allowed about seven companies including Tata Communications Payment Solutions, Prizm Payment Services, Muthoot Finance and BTI Payments to set up such ATMs.

While they were going slow on the business front, demonetisation further disrupted their growth plans and they are working with the RBI and banks to further support their growth story.

In December, the RBI allowed them to source cash from retail outlets but that is a gradual process they say.

Another WLA operator said, "It is a good move but it may take time to pick up. Demonetisation has also impacted deployment of more ATMs and hence it will delay our break-even and deployment target."

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