As Congress Blames 'Arbitrary Control of Supply' for ATMs Running Dry, RBI Clarifies It's 'Temporary'

New Delhi: As reports of non-availability of cash at ATMs across the country kept coming in through the day, Reserve Bank of India (RBI) in a statement on Tuesday clarified that there is no shortage of currency. The central bank noted logistical issues and non-replenishment of ATMs as the reason behind the cash crunch. However, former Finance Minister P. Chidambaram lashed out at RBI saying the shortage was caused due to arbitrary control on cash supply.

“It has been reported in a section of the media that there is 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,” said RBI in its statement issued on Tuesday.

Chidamabaram asked for the reason behind the shortage in a tweet: “If RBI has injected sufficient cash, it is obliged to tell the people why there is a cash shortage.”

The central bank explained, “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.”

However, Chidambaram was not convinced. He said that cash supply must grow at the same rate as the economy.

“The cash shortage may be because cash supply has been arbitrarily reduced. A government is obliged to provide as much cash as the people need at any given time. Government or RBI cannot arbitrarily control the supply of cash,” said the former finance minister.

Complaints of cash shortage started pouring in from across the country, including New Delhi, Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Rajasthan. While some complained of ATMs running dry, some said ATMs were simply not working, leading to fears of cash crunch of the kind seen in the immediate days of demonetisation.

Finance Minister Arun Jaitley, after a major outrage on social media, said the shortage was short term. “Temporary shortage of currency in some areas is being tackled. There is more than adequate currency in circulation,” Jaitley said.

Jaitley said in a tweet that he has reviewed the currency situation in the country.

"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," Jaitley said.

MoS Finance SP Shukla said the RBI has formed a committee to transfer currency to states. “We have cash currency of Rs 1,25,000 crore right now. There is one problem that some states have less currency and others have more. The government has formed state-wise committee and the RBI too has formed a committee to transfer currency from one state to other. It'll be done in three days,” Shukla said.

The Centre has also ramped up production of currency.

"We print about 500 crore of Rs 500 notes per day. We have taken steps to raise this production five times. In the next couple of days, we will have supply of about Rs 2500 crore of Rs 500 notes per day. In a month, supply would be about Rs 70000-Rs 75000 crore," said economic affairs secretary Subhash Chandra Garg.

The RBI added, “Further, as a matter of abundant precaution, RBI is also taking steps to move currency to areas which are witnessing unusually large cash withdrawals. Nevertheless, printing of the notes has been ramped up in all the 4 note presses.”

The government is trying to get non-functional ATMs normalised at the earliest, said the Department of Economic Affairs.

"Government of India would like to assure that there have been adequate supply of currency notes which have met entire demand so far. It would also like to assure it would be supplying adequate currency notes to meet even higher demand in coming days/months," said Department of Economic Affairs.