"We are facing a cash crunch". "There has been unusual spurt in currency demand in the country in last three months", it said. "The temporary shortage caused by "sudden and unusual increase" (in demand) in some areas is being tackled quickly".
Minister of State in Finance Shiv Pratap Shukla told TV channels: "There is an issue of disparity". The government has formed state-wise committee & RBI also formed a committee to transfer currency from one state to other. "It'll be done in three days".
West Bengal Chief Minister Mamata Banerjee said the episode reminded about the 2016 note ban days and even described the situation with "financial emergency".
He further added, "Government is taking all steps to ensure that ATMs are supplied with cash and to get non-fucntional ATMs normalised at the earliest".
Cash-starved customers in large numbers started queuing up outside ATMs and banks since early morning today to withdraw currency notes from vending machines, but a lot of them were either out of service or had a board notifying "no cash".
Residents in Madhya Pradesh capital Bhopal said many ATMs have had no cash for 15 days.
Addressing the media, Department of Economic Affairs (DEA) secretary, Subhash Chandra Garg said that steps are being taken to raise the Rs 500 note production by five times. In Hyderabad, news agency ANI quoted people as saying they had been unable to withdraw cash since yesterday. Congress president also hits out at the Prime Minister for his silence over the recent scams.More news: 7-star PSG humiliate Monaco to regain title
India's banking system has been fraught with challenges including a surge in bad loans and a recent revelation of a $2-billion fraud at the country's second-largest state lender Punjab National Bank. "We were forced to stand in queues as he snatched 500-1000 rupee notes from our pockets and put in Nirav Modi's pocket", Rahul Gandhi told ANI.
That is a source of worry for India's policymakers as a sustained heavy currency withdrawal suggests a return of cash hoarding by individuals, diluting the objective of a massive note ban exercise by Prime Minister Narendra Modi in late 2016. "It is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests". He said there was unusually high demand for currency in the last couple of months.
State Bank of India Chairman Rajnish Kumar Sinha said a cash-shortage situation is not new and this is a temporary situation.
Since it has been a practice to hoard cash before any election to meet huge campaign expenses, there has been a rise in demand for cash in Karnataka, which goes to polls on May 12. The obvious question then is why ATMs and banks are short on cash.
"There is no shortage of notes in stock, there is no shortage of cash being printed".