Notes worth Rs 13.6L cr will need to be withdrawn
Given that the total value of currency in circulation is Rs 17 lakh crore -with around 80% of that in high value currency -banks will have to withdraw over Rs 13.6 lakh crore of currency from the public which could lead to a logistic nightmare.Bankers are still trying to figure out how to handle the flood of currency that will float into their branches in the remaining days of the week. Many banks have drawn up plans to order note counting machines. SBI plans to use its large network of cash deposit machines to full capacity to handle the notes.
The biggest fear is that ATMs, which see less than 150 transactions a day could see their load go up manifold, requiring banks to replenish them multiple times. There are 2.15 lakh ATMs in India but since cash can be transported only with armed gu ards there are less than 10000 cash vans. This could cause a problem in refilling ATMs with Rs 100 and Rs 50 notes which are the only legal tender that can be used in the ATMs until the new Rs 2,000 notes are printed.
“There is a large stash of Rs 100 and Rs 50 notes with RBI. However, low value notes would mean an increase in the number of transactions,“ said Mani Mamallan, founder md of Electronic Payment and Services which manages ATMs for many public sector banks. At present customers are allowed only five free ATM transactions in a month inurban areas.
Executives at ICICI Bank, HDFC and Axis Bank said that they are planning to freeze the ATM network tonight at 11.55 PM. Everyday the perday cash limits of Rs 30,000Rs 35,000 on debit cards are reset at 11.50 PM. Tonight, banks are planning to freeze the network and have already alerted switch operators.Cash refilling companies, which load cash at ATMs during normal business hours, have been instructed by some private banks to return cash loads at certain branches to be kept open tonight.
“We have to reconfigure our systems. If you notice the average ATM dispensation slot --it is about 34th of an inch. Now per transaction if a person were to withdraw Rs 10,000, the ATM will not be able to push out 1000 notes of Rs 100 denomination at one go.ATM transaction limits will have to be set much lower,“ said a HDFC Bank executive.
“About Rs 25,000 crore is in circulation in India in the ATM network now only 30% of that is Rs 100 denominations. More than 50% of notes disbursed are in Rs 500 denominations and the remainder in Rs 1,000 notes. It will be a logistical problem to handle the per day ATM cash needs of India for sometime going forward. We are awaiting RBI's response,“ said a top official at ICICI.
The biggest fear is that ATMs, which see less than 150 transactions a day could see their load go up manifold, requiring banks to replenish them multiple times. There are 2.15 lakh ATMs in India but since cash can be transported only with armed gu ards there are less than 10000 cash vans. This could cause a problem in refilling ATMs with Rs 100 and Rs 50 notes which are the only legal tender that can be used in the ATMs until the new Rs 2,000 notes are printed.
“There is a large stash of Rs 100 and Rs 50 notes with RBI. However, low value notes would mean an increase in the number of transactions,“ said Mani Mamallan, founder md of Electronic Payment and Services which manages ATMs for many public sector banks. At present customers are allowed only five free ATM transactions in a month inurban areas.
Executives at ICICI Bank, HDFC and Axis Bank said that they are planning to freeze the ATM network tonight at 11.55 PM. Everyday the perday cash limits of Rs 30,000Rs 35,000 on debit cards are reset at 11.50 PM. Tonight, banks are planning to freeze the network and have already alerted switch operators.Cash refilling companies, which load cash at ATMs during normal business hours, have been instructed by some private banks to return cash loads at certain branches to be kept open tonight.
“We have to reconfigure our systems. If you notice the average ATM dispensation slot --it is about 34th of an inch. Now per transaction if a person were to withdraw Rs 10,000, the ATM will not be able to push out 1000 notes of Rs 100 denomination at one go.ATM transaction limits will have to be set much lower,“ said a HDFC Bank executive.
“About Rs 25,000 crore is in circulation in India in the ATM network now only 30% of that is Rs 100 denominations. More than 50% of notes disbursed are in Rs 500 denominations and the remainder in Rs 1,000 notes. It will be a logistical problem to handle the per day ATM cash needs of India for sometime going forward. We are awaiting RBI's response,“ said a top official at ICICI.
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