Mumbai: More than a year after remonetization, demand for cash has sharply gone up as seen in a spike in cash withdrawals from ATMs, resulting in cash crunch across some states, the State Bank of India (SBI) said in a research report on Wednesday.

The report, citing data from the Reserve Bank of India (RBI), showed that ATM cash withdrawals increased by 12.2% during the second half of FY18, compared to the first half.

This growth is much higher compared to that in FY16 or FY15 and even the five-year average of 8.2% during FY12 to FY16, the report said.

“Cash withdrawals in H2 are always more than the H1 due to many reasons like festival and procurement season that fall in H2 but in FY18 such a large increase is still not self explanatory," the report added.

Further, the report highlights that the income velocity of currency with the public has declined in FY18, an indication that higher denomination currency of Rs2,000 is not adequately circulated.

“We believe, there has been a forced shift in currency composition with more of smaller denomination notes in circulation now, which is positive," the report noted.

On 17 April, Mint reported that various states, including Andhra Pradesh, Madhya Pradesh, Telengana, Maharashtra and Bihar, were facing a cash crunch at ATMs.

Subhash Chandra Garg, secretary at the department of economic affairs, said that demand for currency notes had doubled in the past two months to around Rs40,000-45,000 crore. In the first fortnight of April alone, the demand was close to Rs45,000 crore.

Garg had also given an assurance that the government was looking to ramp up printing to around Rs2,500 crore of Rs500 notes daily in the next few days.

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