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No currency shortage, printing of notes ramped up, says RBI

An unusual spurt in currency demand in states like UP, MP, AP as well as poll-bound Karnataka led to dry ATMs in several parts of the country.

No currency shortage, printing of notes ramped up, says RBI
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Mumbai: The Reserve Bank on Tuesday said there is no shortage of currency in the system. However, it added that there may be shortages in "some pockets" largely due to logistical reason.

"It has been reported in a section of the media that there is a shortage of currency in certain parts of the country. It is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests. Nevertheless, printing of the notes has been ramped up in all the four note presses. The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. RBI is closely monitoring both these aspects. Further, as a matter of abundant precaution, RBI is also taking steps to move currency to areas which are witnessing unusually large cash withdrawals," it said in a statement.

What the government said:

Earlier in the day, Finance Minister Arun Jaitley had assured people that there was no shortage of currency as adequate stocks were available. 

"Overall there is more than adequate currency in circulation and also available with the banks. The temporary shortage caused by 'sudden and unusual increase' (in demand) in some areas is being tackled quickly," he said in a tweet. Jaitley, who has been away from office since April 2 due to a kidney ailment, added that he has reviewed the currency situation in the country.

On the other hand, economic affairs secretary Subhash Chandra Garg said the Reserve Bank will increase five-fold the printing of Rs 500 notes to about Rs 2,500 crore a day to deal with the cash shortage. "So, in a month, we will be printing about Rs 70,000-Rs 75,000 crore. This should give you an assurance that we are geared up to meet the rising demand," he said, as per PTI.

The government, Garg said, suspects that Rs 2,000 notes are being hoarded as they are not coming back into the circulation fast enough. "There is also a perception that there may be a shortage of currency in the future. So people have started withdrawing and it has contributed to the crisis. We keep adequate stock of currency notes, which is one-sixth of the currency in circulation," he said. 

Here's what happened:

An unusual spurt in currency demand in states like Uttar Pradesh, Madhya Pradesh, Andhra Pradesh as well as poll-bound Karnataka led to dry ATMs in several parts of the country, sending the government scrambling to make contingency plans to cover the deficit.

ATMs of both public and private sector lenders in several cities were either not operating or showed no cash signs, a situation that officials insisted was not alarming and did not warrant panic.

Cities and towns across AP, Telangana, Karnataka, MP, Gujarat, Maharashtra, Bihar, Rajasthan and UP were impacted by the cash crunch.

Some ATMs downed shutters with 'no cash' and 'out of service' signs, prompting the government to move currency from surplus regions. Some ATMs in Delhi too went dry.

Political leaders from Congress chief Rahul Gandhi to TMC's Mamata Banerjee trained guns on the government saying ATMs running dry was a reminder of demonetisation days.

(With PTI inputs)