RBI says no shortage of currency, but steps up printing of notes at 4 presses

Recap bonds for bank recapitalisation | Acting on its plan announced in October 2017, the central government issued recap bonds worth Rs 88,000 crore in January—the first instalment of committed Rs 2.11 lakh crore. This was prompted by banks that were reeling under NPAs and were short when it came to meeting their capital adequacy and provisioning targets.

Amid news reports of a cash crunch from some parts of the country, Reserve Bank of India (RBI) clarified that there is sufficient cash in RBI vaults and currency chests.

However, with ATMs facing shortage of cash, RBI has ramped up printing of notes in all the four presses, it said.

“It has been reported in a section of the media that there is shortage of currency in certain parts of the country. It is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests. Nevertheless, printing of the notes has been ramped up in all the 4 note presses,” RBI said in a statement.

In the last few weeks, many ATMs have gone dry in states including Telangana, Andhra Pradesh, Karnataka, north Bihar, Maharashtra, Madhya Pradesh and parts of Delhi. The government and RBI officials had met and attributed the shortfall to unusual demand for cash in a few states and instructed banks to improve their cash management.

Earlier in the day, Finance Minister Arun Jaitley assured that there was more than adequate currency in circulation and plenty was available with banks.

“Have reviewed the currency situation in the country. Over all there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly,” Jaitley wrote on micro blogging site Twitter.

According to RBI, “The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. RBI is closely monitoring both these aspects.”

However, as a matter of precaution, RBI is taking steps to move currency to areas which are witnessing unusually large cash withdrawals, the banking regulator added.

An estimated 10-12 percent of the total ATMs are facing cash crunch. The government estimates the situation will normalise in the next week.

RBI and government have formed committees in states to ensure adequate stock of currency. The supply of Rs 500 and Rs 200 notes will be stepped up in the next few days, officials said.