ATM Cash Crunch: A Temporary Shortage or a Deliberate Push towards Payment Banks

There are reports that a large number of ATMs have run out of cash in Delhi and many other states in the country. Though the Union finance minister has said that this is just a temporary shortage and there is plenty of currency in circulation, some of the experts have termed it as a deliberate exercise of reducing the cash flow. This might reminds the country of the demonetisation days when long queues were seen outside the ATMs to get one’s own money.

The finance minister may have termed it as a temporary shortage but the pinch is definitely being felt by the people. Many have tweeted saying that there is massive cash crunch and the ATMs are not dispensing higher denomination notes. It has been more than two weeks now that this crunch was felt. The ATMs have gone dry in some of the states like Uttar Pradesh, Telangana, Madhya Pradesh, Chhattisgarh, Bihar. Even Modi's Gujarat hasn't been spared.

It is s quite astonishing that despite 99.17% of the currency of the pre-demonetisation period back in the flow, the ATMs are running dry. According to the RBI data, as of February 2018, the total currency in circulation is at Rs 17.82 lakh crores. During the demonetisation period, it was 17.97 lakh crores.

The only reason cited by the RBI is that the 2,000 rupee notes are being hoarded. But, is it just hoarding of the notes or is there some other reason for the present mess being witnessed in large parts of the country?

We all know that the major beneficiary of demonetisation in transaction terms was Paytm. All the euphoria created to unearth black money, terrorist money, etc. fell flat. After demonetization, Paytm transactions touched 5 million in a day, regularly. The total transaction hit was Rs 24,000 crore a day and the company registered 700 percent increase in overall traffic and 1000 percent growth to paytm wallets.

In the year 2016 on November 9, when the PM shocked the country with his announcement to demonitise the high value currency there was full page advertisement in almost all the newspapers in the country that asked the citizens to pay by Paytm. It even congratulated the PM for taking such a bold step. And why not. Just 15 days later, the same newspapers carried headlines: 'Paytm touches the new record of 70 lakh transactions'. Paytm became the biggest gainer in the demonetisation exercise. At present, the target of Paytm is to reach a 50 crore user base in next three years.

So, it is anybody’s guess who grew from the demonetisation drive. But the present crunch, if it is deliberately done, is it to once again favour the same old Alibaba company (Paytm)? Or are there other players who are looking for this huge user base?

In a recent newspaper report dated April 4 , 2018, it stated, “competition in payments bank (PB) space has just heated up further with the entry of Jio Payments Bank Limited. A 70:30 joint venture between Reliance Industries and the State Bank of India, Jio Payments Bank will be competing against more established players like the two-year-old Airtel Payments Bank, Paytm founder Vijay Shekhar Sharma-promoted Paytm Payments Bank, which kicked off last May, and Fino Payments Bank, which followed a month later”.

It is quite unambiguous that the mobile driven payment banks (PB) are the mantra of the present dispensation for financial inclusion. Thus, there are more probable chances of inducing people to use PB’s for financial transactions and reduce the currency flow.

It is alleged that the sheer profile of these two giants, the SBI which has an assets base of Rs 18.74 lakh crore and the RIL which has a turnover of Rs 4.46 lakh crore, would completely dwarf the payment banking candidates corresponding to them. But who would be the bigger gainer is not a question at all. Because for sure it will be RIL.

The connection of Reliance Jio and the present government is no hidden secret. The crony capitalism being practiced by the ruling party is aptly clear from the last four years of rule. Be it with the mobile spectrum or the Rafael deal, the BJP has shown its true colours. The doubts created that the present cash crunch in the ATMs is a deliberate attempt to further push the Indian population into mobile related banking and retail activities cannot be brushed aside.