For those who have faced a shortage of small-value notes and coins in their wallets, the next three months could bring a change.
India’s largest lender, State Bank of India (SBI), is looking to install dozens of cash and coin dispensers by the end of June, as it leads an initiative by the government and the Reserve Bank of India (RBI) to ease access to low-denomination paper money and coins.
The state-owned lender plans to install 60 such machines in markets and other high-traffic areas where demand for change is high, according to four people familiar with the development and a document seen by Mint.
The rollout will cover branches with currency chests in cities such as Bengaluru, Pune, Amravati, Chandigarh, Vellore, and Shimla, among others. The idea is to cover 13-14 states, the person said.
“If the bank sees usage pickup at these machines, it will gradually increase the number. One has to scan the QR code through a UPI app to be able to withdraw cash,” said the person. “SBI is leading the initiative, while a couple of other banks are also involved.”
Bank of Baroda has already deployed two ATMs for small value notes in Mumbai and New Delhi, wherein users can withdraw cash against UPI transactions. The machines have been deployed in high footfall areas as standalone units so that users of all banks can access the facility, one of the persons cited above said.
Change for users
These dispensers are expected to fill a key gap in the cash supply infrastructure. Traditional cash dispensers, or ATMs (automated teller machines), allow withdrawals of ₹100, ₹200, and ₹500 notes, pushing customers to visit bank branches for small notes and coins.
The idea is to install these at metro and urban locations currently, instead of going to rural areas, according to the person. The reason is that rural customers have access to micro ATMs and customer service points where customers can get small-value notes. “The plan is being pushed by the central government and RBI,” the person added.
“Small pilots are being done, and these will be ATMs within bank branches themselves—and depending on their success, RBI will consider rolling them out to other banks,” said another person aware of the discussions.
SBI is looking for a vendor, according to the document cited earlier, a request for bidders for this project. The document showed that these machines will dispense ₹1, ₹2, ₹5, and ₹10 coins, as well as ₹10, ₹20, and ₹50 notes, through UPI QR code-based authentication.
At 40.9%, ₹500 notes accounted for the largest chunk of bank notes in circulation at the end of 2024-25, showed RBI’s annual report. This was followed by ₹10 notes at 16.4%, ₹100 notes at 14.7%, and ₹20 notes at 8.9%.
“The availability of small value notes could be a challenge because the volumes required to meet the demand will be much higher, and a couple of withdrawals would lead to the cassette being depleted,” said Navroze Dastur, regional vice-president APAC and managing director India, NCR Atleos.
This could also pose a logistical challenge in terms of replenishing the ATMs multiple times and banks might have to rely on branch employees for this because cash management companies rarely deal with such small value notes, Dastur said, adding that there is “definitely a need and demand” for lower denomination notes in the market and a general shortage in cash for loading ATMs in some election-bound states.
Emails sent to SBI, Bank of Baroda, RBI and the ministry of finance remained unanswered till press time.
Mint reported on 27 January that the Centre is exploring multiple ways to make small-denomination currency notes more widely available, citing two officials familiar with discussions.
Even as UPI remains ubiquitous, Indians have not sidelined ATMs. On average, customers withdrew ₹5,835 every month from ATMs in 2025, as against ₹5,586 in 2024, according to data from ATM solutions company CMS Info Systems.
Savings for banks
Meanwhile, experts said the introduction of small cash dispensers will also lower transaction costs for banks at branches.
Parijat Garg, a digital banking expert, said that data shows a rise in the supply of small notes in the system, indicating a few hundred cash withdrawals at bank branches, since these notes are not available at current ATMs.
“The majority would be through branches of public sector banks. Each in-person branch interaction is an increasing service cost for the bank, in the order of ₹90-100; ATM interactions are much cheaper (about ₹15) and also offer improved 24/7 service to the end-customer,” said Garg.
Garg said that the proposed small-value currency ATMs would entail upfront capex of ₹5-7 lakh per ATM but would yield cost efficiencies over the years. “Current ATMs hold 10,000 notes; small currency ATMs would need to be designed to hold 4-5 times this capacity for it to be meaningful.”
The government and the central bank’s push comes amid requests by several quarters to address the shortage of small notes. The Indian Express reported in December that the All India Reserve Bank Employees Association (AIRBEA) wrote to deputy governor T. Rabi Sankar.