The opposition party also needled the government on the recent bank scams, saying people appeared to have lost confidence in banks.
“I suspect ordinary people are withdrawing cash but not putting back into the banks their surplus cash. It is possible that there is some loss of confidence in the banking system, thanks to the bank scams,” Congress leader and former finance minister P Chidambaram said.
“After demonetising 500 and 1,000 rupee notes, the government printed Rs2,000 notes! Now, the government is complaining that Rs2,000 notes are being hoarded!! We always knew that Rs2,000 notes were printed only to help hoarders,” he said.
“The ghost of demonetisation has come back to haunt the government/RBI. Why are ATMs still bring re-calibrated even 17 months after demonetisation?” Chidambaram said in a series of tweets on the reported shortage of money in banks in some states.
“I support digitisation, but the government cannot force the pace of digitisation or arbitrarily reduce the supply of cash,” he said.
“Is it correct that currency in circulation has increased by only 2.75% since demonetisation? If so, I maintain that the government/RBI are not allowing money supply to grow at the same rate as the nominal GDP.
“I also suspect that RBI seriously miscalculated demand for cash in the post-harvest season,” he said.
The central bank on Tuesday said that there was “sufficient cash” in its vaults and currency chests and it was “taking steps to move currency to areas” which have witnessed unusually large cash withdrawals.
But Chidambaram said the “RBI’s statement is unsatisfactory. If RBI has printed and supplied sufficient cash, it must explain why there is a cash shortage.”
The State Bank of India meanwhile described reports of cash shortage as “logic defying”, and said the possible reasons could be the declining income velocity of currency with the public in 2017-18 coupled with increased ATM withdrawals during the second half of last fiscal year.
An SBI Ecowrap report authored by Chief Economist Soumya Kanti Ghosh said that currency in circulation in the economy had reached Rs18.29 lakh crore by March 2018, surpassing its pre-demonetisation level of Rs17.98 lakh crore.
“The recent reports of cash shortage appear intriguing and defy logic. However, there are a couple of trends that beg explanation and may be the possible reasons for such apparent trend,” the SBI report said.
“First, income velocity (of currency with public) has been on a declining trend in FY18, particularly in the second half. This indicates possibly currency of the higher denomination Rs2,000 is not getting adequately circulated in the economy.
“Our internal estimates suggest that in states like Bihar, Gujarat and the southern states, the income velocity is far less than the national average,” Ghosh said.
Juxtaposing this trend with the ATM withdrawals, he said that during the second half 2017-18, ATM withdrawals increased by 12.2%, compared to the first half.
“This growth was much higher compared to FY16 or FY15 and even the 5-year average (8.2% during FY12 to FY16),” the report said.
“We believe, there has been a forced shift in currency composition with more of smaller denomination notes in circulation now.”
SBI Chief Operating Officer Neeraj Vyas said in a statement that the situation had improved over the last 24 hours.
“Efforts are being made on a continuous basis to improve the cash availability further in a few geographies. Overall issue of less cash should come to normalcy within soonest possible time,” he said.
State-run Punjab National Bank (PNB) said there was no “cash shortage in its ATMs across the country.
“Overall, Punjab National Bank has not faced any cash shortage in its ATMs and continue to function as usual,” the state-run lender said in a statement.
“Out of 9,679 PNB ATMs, there is a 90% availability of ATMs which is normal.”
