Despite the government’s goal of a ‘cashless economy’, India’s demand for paper money seems to be growing. It is estimated that the cash in circulation was zoomed in last month, which increased almost from the total ₹27.9 trillion on April 9, published by the Reserve Bank of India (RBI). The surge was probably described by the RBI report as a “Kovid-19-inspired dash for cash”, with people in pandemic-devastated cities fearful of using or keeping large sums away for ATM machines. Interruptions caused by local may be the lockdowns behind this display of ‘precautionary intent’, as noted last year as narrative accounts over the past three weeks have felt the need for currency for medical emergencies or foreshadowed. Due to our national push for online transactions in this digital age, the rise of banknotes looks like a slide-back. However, this can also be understood as a reflection of the notion that black-market purchases are inevitable, given the lack of life-support in many Kovid hotspots across India. The push came to a screeching halt. Apart from oxygen cylinders and concentrates, various drugs have been found to be sold with cash at premium prices. Under such circumstances, the lightning bolt of blame on consumers does not do good. Instead, let us make the currency as easily available to us as possible.
The textbook rationale for that is clear. Uncertainty is not only in cash reserves, but also greater savings in a large inclination towards savings, which serves to keep its economy from accelerating across the country. If the currency is difficult to obtain, it will fuel both household worries and their efforts to capture it. In recent years, especially after demonetisation in 2016, coverage of ATM networks has been in decline. Banks are closing them down. Today, with so many machines neglected, cash apologies are no longer common. This is partly marked by the rapid adoption of our Unified Payments interface for online transfers, a valuable trend, and the lost incentive of banks to install ATMs for their own customers after RBI has made it cheap for anyone. Valid card for withdrawing money from any dispenser. However, the result has been a massive reduction in access to banknotes, and now that Kovid Bank has reduced banking hours along with visits, scarcity anxiety may have entered the game. Rational or not, the dash for cash is likely to occur in recent weeks and it may not be over yet.
Although the April scramble for cash has become a scar, the banking sector needs to respond to it. Banks need to expand their ATM chains. In the interim, they can reactivate those that collect dust and ensure timely refills of those in operation. Our central bank needs to make policy adjustments to initiate and promote this. Neglect of Cash Distributors Many banks have failed to adapt their ATM interfaces to the risk of Kovid infection. More than a year into the viral outbreak, it speaks volumes about their customer orientation. Right now, most people have a lot of touch points, flash the surf of unnecessary options and it takes a long time to get the money out. It causes an anxious experience. These are extraordinary times. And, no, the cash did not come out. Still, anyway. So the ideal is not to lead to what is needed.