RBI Probes Cash Crunch at ATMs After Complaints Across Indian Cities

The Reserve Bank of India (RBI) is reviewing cash availability in bank branches and automated teller machines (ATMs) following reports of cash shortages in several parts of the country over the past three months, according to sources familiar with the matter.

Complaints have come from tier-II cities and smaller towns, with customers of banks including the State Bank of India (SBI) alleging that ATMs ran out of cash, as reported by NDTV Profit.

The RBI has asked banks to provide details of cash inventories at their branches to determine whether ATMs are being replenished with adequate cash on time. Sources indicate the regulator may take action if banks are found to be maintaining insufficient cash at ATMs.

Cash management firms have reported losses during this period due to the alleged shortages.

However, bankers caution that cash inventory figures can be misleading because they include soiled or damaged notes that cannot be used in ATMs. This could create a discrepancy between reported inventory and the actual cash suitable for ATM dispensing.

Senior industry executives note that ATM operations have become cost-intensive, with limited incentives for banks to maintain and expand their ATM networks. The low profitability of the business has made it less attractive for banks.

The Confederation of ATM Industry (CATMi) raised the issue in June, writing to the Indian Banks' Association (IBA) to urge timely replenishment of ATMs.

CATMi reported that ATM cash fulfilment levels ranged between 57% and 64% during April and May, meaning a significant portion of cash demand was unmet. Karnataka, Andhra Pradesh, and Telangana experienced the most severe shortfalls.