New Delhi: The Reserve Bank of India (RBI) is assessing cash availability at bank branches and Automated Teller Machines (ATMs) following complaints of cash shortages reported from several parts of the country over the past 12 weeks, according to sources.
The review comes after customers in several Tier-II cities and smaller towns reported that ATMs, including those operated by the State Bank of India (SBI) and other banks, frequently ran out of cash, causing inconvenience to account holders.
RBI seeks details from banks
Sources said the RBI has sought information from banks regarding cash inventories maintained at their branches to determine whether ATMs are being replenished with sufficient cash on time.
The central bank is examining whether banks have maintained adequate cash levels to meet customer demand. If deficiencies are found, the regulator may consider appropriate action against banks that fail to ensure sufficient cash availability in their ATM networks.
The move is aimed at identifying operational gaps and improving cash management across the banking system.
Banks cite soiled currency issue
Banking officials, however, have argued that cash inventory data may not accurately reflect the amount of currency available for ATM replenishment.
According to bankers, the reported cash inventory often includes soiled or damaged currency notes, which cannot be loaded into ATMs.
As a result, they said there may be a significant difference between the total cash held by branches and the quantity of currency that is actually fit for ATM use.
Cash management firms affected
The reported shortages have also affected cash management companies responsible for transporting and replenishing currency in ATM networks.
Industry sources said these firms incurred financial losses during the period as operational challenges disrupted cash replenishment activities.
Senior industry executives also pointed to the increasing cost of operating ATM networks, saying the business has become less financially viable for banks.
According to them, rising operational expenses and relatively low returns have reduced the incentive for banks to maintain and expand ATM infrastructure.
Industry body flagged concerns
The issue had earlier been highlighted by the Confederation of ATM Industry (CATMi), which wrote to the Indian Banks’ Association (IBA) in June, urging banks to ensure adequate cash replenishment in ATMs.
CATMi said ATM cash fulfilment levels ranged between 57 per cent and 64 per cent during April and May, indicating that a substantial share of cash requirements remained unmet.
The industry body identified Karnataka, Andhra Pradesh and Telangana among the states experiencing the highest levels of ATM cash shortages.
RBI monitoring situation
The RBI’s review is expected to help assess whether the reported shortages stem from inadequate cash management practices, operational challenges or other factors affecting ATM replenishment.
The regulator’s findings could lead to measures aimed at improving cash availability, particularly in areas where customers continue to face difficulties accessing cash through ATMs.
While digital payments continue to grow across India, cash remains an essential mode of transaction for many individuals and businesses, making timely replenishment of ATMs a critical component of banking services.