ATM cash crunch superficial: SBI Research
Mumbai: A day after claiming that there was a Rs70,000 crore cash shortfall in the system, SBI Reseach on Thursday termed the ongoing shortage in cash supplies as “superficial”, citing a decline in cash withdrawals from ATMs in the March quarter over the previous quarter.
Though as per Reserve Bank of India (RBI) data, ATM withdrawals rose 12.2% in the second half of FY18 over the first half, the quarter-on-quarter ATM withdrawal trend indicates that there has been a continuous increase in withdrawals 15.5% in Q1, 6.9% in Q2 and 8.8% in Q3 of FY18. But in Q4, the withdrawal declined by 0.5% over Q3, SBI Research said in a report on Thursday.
“The decline in ATM withdrawal in the fourth quarter could actually be a seasonal phenomenon apart from the usual reasons floating around like currency shortage. This strongly supports our contention that the current shortage could be superficial rather than real,” the report said.
Cash withdrawals in H2 are always more than H1 due to many reasons like festival season and procurement season which always fall in H2 but in FY18 the increase is not self- explanatory. Currency in circulation has surpassed the pre- demonetisation level of Rs17.98 trillion to reach Rs18.29 trillion by March 2018. The report said the sudden surge in currency in circulation is perplexing.
The quarterly growth in Q4 of FY18 shows that from an average growth of 4.4% of five years between FY12 and FY16, growth has shot up to 8%. “This is despite the fact that economy had achieved remonetization and digital modes have also gained traction in a big way,” it said.
Interestingly, in a report SBI Research had said on Wednesday that the cash shortfall was nearly Rs70,000 crore in the system. This comes even as government and the RBI claimed that there was no shortage of currency.
Based on the nominal GDP growth of 10.8% and 9.8% in FY17 and FY18 respectively, currency with the public would have been Rs19.4 trillion by March 2018, the report had said. However, currently currency with public is only Rs17.5 trillion which shows a gap of Rs1.9 trillion. But the increase in digital payment compensates some part of the existing gap to the tune of Rs1.2 trillion. “Therefore, the apparent shortfall is around Rs 70,000 crore or even less,” the report had said.