Arun Jaitley blames shortage on 'sudden, unusual increase' in withdrawals

Carla Harmon
April 17, 2018

RBI report show that the currency in circulation in the country has reached the pre-demonetisation level of about Rs 17 lakh crore. Where these notes of Rs. 2,000 denomination are going, who are keeping them out of circulation? "We have been unable to withdraw cash from ATMs as the kiosks, in several parts of the city, have run out of cash. SBI is facing a major problem because payment under many government schemes is made through the bank".

Jaitley took to the micro-blogging site Twitter and wrote, "Overall there is more than adequate currency in circulation and also available with the banks".

His junior minister SP Shukla told news agency ANI that there is a "problem that some states have less currency and others have more", promising that it will be solved in three days with both the government and the Reserve Bank of India working to "transfer currency from one state to other". A proper cash management system has been suggested to overcome such difficulties, which could help in maintaining the cash in the states, so that there is no misbalance of the funds, and people don't have to face the ordeal often times. Sources in the North Block ministry said the cash shortage was not alarming and there was no need to panic.

The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, introduced in the Lok Sabha in August previous year, has a "bail-in" clause, which some experts say brings potential harm to deposits in the form of savings accounts.

Meanwhile, a committee has been formed by the government to address the problem of currency shortage in certain states and according to the Minister of State for Finance Shiv Pratap Shukla, the issue would be resolved in next 2-3 days.

He further said that the Centre has only Rs. 1,25,000 crores of cash currency as of now.

He was referring to news reports of ATMs running out of money at some places in the state. After the demonitisation exercise, the currency in circulation increased to Rs. 16,50,000 crore.

Public sector bank executives also said there is a spurt in demand for cash to make payments for agricultural activities as well. ATMs are not dispensing cash. These include ATMs of both nationalised and private banks. This purportedly triggered withdrawals from banks.

Other reports by iNewsToday