India’s government on Tuesday sought to ease concerns over a cash crunch that has shut down ATMs around the country, saying it was taking steps to address the shortage.
Currency withdrawal by individuals for the January-March period was at 1.4 trillion rupees, sharply higher than 1.1 trillion rupees in the same quarter of 2016, according to Reserve Bank of India data. Demand for cash shot up by 450 billion rupees ($6.9 billion) in the first two weeks of April alone.
“In just one busy shopping street in Delhi today, eight of out of nine banks displayed signs declaring that they had run out of cash, with long queues outside the one branch that was still dispensing money,” The Times of London reported on Tuesday.
But the Finance Ministry said in a statement that “The government is taking all steps to ensure that ATMs are supplied with cash and to get non-functional ATMs normalized at the earliest,” while Finance Minister Arun Jaitley tweeted that there “was more than adequate currency in circulation.”
“The temporary shortage caused by a sudden and unusual increase in some areas is being tackled quickly,” he added.
The Reserve Bank of India, the country’s central bank, insisted it had “sufficient cash” in its vaults but said it was increasing the printing of rupee notes at its presses around the country, including a five-fold jump in the printing of 500 rupee notes.
The cash crunch has revived fears of a repeat of the crisis that ensued after India’s Prime Minister Narendra Modi in late 2016 announced he was scrapping the 1,000 and 500 rupee notes with only months’ notice. The “demonetization” was aimed to promoting a digital economy to combat counterfeiting and bribery.
Cash withdrawals in India go up during crop harvest season, which is usually during March to April, and then during festival season in October, but the unusual demand for cash over the past three months suggests that people are hoarding high-value notes.
Analysts say that concerns over the health of India’s banking system have also triggered savers to withdraw cash.