ATMs in India Are out of Cash After Gov’t ‘Demonetization Drive’
In India, a campaign to withdraw legal tender status from certain banknotes has caused economic turmoil for many native Indians. Most recently, this “demonetization drive” is, in certain regions, causing ATMs to run out of cash — resulting in cash shortages in these areas.
ATMs Running Out of Money
In the cities of Srikakulam, Vizianagaram and Visakhapatnam people are still feeling the effects of the policy, which was initially rolled out in the beginning of the year. Those living in the 3 cities have had to deal with a constant shortage of cash in both banks and ATMs.
Indeed, sources that have spoken to The Times of India say that 90 percent of ATMs in the region do not have cash. Additionally, nearly 70 percent of 648 ATMs in those 3 cities are completely out of money.
Deputy general manager of the State Bank of India (SBI), Ajoy Kumar Pandit, said the customers are losing confidence in them as a result of the crisis.
“Nearly 70 percent of our 648 ATMs in the three districts are out of cash. The rest will also become dry in the next few days as we do not have cash to refill the machines. We are helpless from our side.”
Many locals have also had problems paying for things as a result. P Srinivasa Rao, a native of the area, said she has been unable to pay for her daughter’s tuition because she had no means of doing so without cash. Furthermore, the deadline for payments was April 10th and the school does not have an online payment system.
Fledgling Infrastructure in India Unable to Cope
The Reserve Bank of India, the country’s central bank, has siphoned away a large percentage of cash from the southern parts and diverted it to the northern regions. According to The Times of India, this reallocation was the result of recent elections within the country — a decision that has negatively affected the Southern portions of the country.
The reasoning behind the government’s actions regarding cash allocation was due, in part, to a belief that it would incentivize smart payments. However, the government overestimated the country’s financial infrastructure and its ability to facilitate digital payments.
Despite the country’s recent advancement towards digital money, Cash-based payments are still very much popular with India’s population of nearly 1.3 billion people. In fact, this is the case for many developing countries. Despite technological advancements and governments promoting digital money use, people have continued to resist a digital transition for cultural and sociological reasons.
Because of the country’s large informal economy, India’s recent demonetization drive has had a profound impact on its citizens, especially the poor who do not have access to the infrastructure required to deal with the sudden change. Furthermore, the decision was made unilaterally by India’s Prime Minister and a few of his close associates.
Thus, the effort was a surprise to most when it was first announced. Apparently, it was even a surprise to banks, which did not have enough of the newly designed banknotes to substitute for the canceled ones. As a result, many sectors of India’s economy came to a standstill and endangered the livelihoods of those that depend on the informal cash-based life.
What do you think of India’s cash shortages as a result of the demonetization effort? Let’s hear your thoughts.
Images via Reserve Bank of India, [email protected]