ATMs run dry and queues take hours as Indians look to exchange banned notes
India's cash crisis stretched for days this week as ATMs ran dry and people stood for hours in long lines to exchange their now-defunct notes, while a government official said the shortages will continue into December.
India's banks have been caught out by Prime Minister Narendra Modi's unexpected and widely-praised announcement late on Tuesday of the withdrawal of 500 rupee (€6.80) and 1,000 rupee notes, part of a crackdown on tax evasion and the underground economy. The now-worthless notes account for 86pc of money in circulation, leaving many Indians with little or no cash.
Printing of a new 2,000-rupee note is ongoing, but work has only just begun on the replacement 500 notes, said an official in the Finance Ministry, who asked not to be identified because the official isn't authorised to speak to the media.
Banknote shortages are likely to continue into next month, the official added. Finance Ministry spokesman DS Malik didn't respond to calls seeking comments. Armed soldiers and security officers were deployed outside banks to manage the growing crowds. Banks are restricting withdrawals to 4,000 rupees per person, adding to the cash shortages.
Pushpendra Pankaj, a worker at New Delhi's Municipal Council, said he had been waiting for one and a half hours at the Canara Bank branch near Parliament House to exchange his old 500-rupee notes. He said he had been told that the bank server had crashed, but he was prepared to stay in line as he needed money for household expenses.
"It's a good move by the government to curb black money, but it is full of hassles for common people like us," said Pankaj.
Compounding the problem is the need to reconfigure the country's 220,000 cash machines so that they can dispense the new 500 and 2,000 rupee notes, which do not fit into the existing cash trays in the ATMs, according to Navroze Dastur, the managing director for India and South Asia at NCR, which supplies about two-thirds of the country's ATMs. Dastur said it will take "some time" to adjust all the ATMs. Until then, the machines can only dispense low-denomination 100-rupee notes, which are increasingly in short supply.
The long queues outside India's banks are a sign that the government was ill-equipped to deal with such a huge transition, said Manoj Joshi, a fellow with the New Delhi-based Observer Research Foundation.
"The whole exercise is premised on the fact that you'll be able to implement it quickly and effectively. Governments in India simply don't have that ability."
Sunday Indo Business