Telangana, Andhra Pradesh cash crunch will not end soon

Telangana Finance Minister has written three letters to the RBI Governor since January this year seeking sufficient amount of cash.

 

The long spell of cash crunch in Telangana and Andhra Pradesh is likely to continue for the next couple of months. Around 60% of the ATMs in the urban areas and 70% of them in the rural areas have been out of order as the banks are not in a position to refill them, courtesy short supply of cash from the RBI.

Those in the knowhow of the banking sector say that the cash withdrawn from ATMs and the banks far outweighs what is credited due to the shortage of currency of all denominations.

Telangana Finance Minister Etela Rajender has written three letters to the RBI Governor since January this year seeking sufficient cash. “I wrote to the RBI Governor Urjit Patel in February last week seeking enough cash for banks so that the ATMs don’t go dry,” Rajender told The Sunday Guardian.

The minister was flooded with requests from MLAs on the last day of the Budget session in the Assembly, all demanding that he should persuade the bankers to put enough cash at the rural branches and ATMs in small towns and major villages. TRS MLA K. Prabhakar Reddy, who represents Munugode in Nalgonda district, told the minister that all the five ATMs in Munugode were out of cash from 7 March.

Choutuppal, a major town on the national highway, too has dry ATMs for the last two weeks. The staff of the minister told this newspaper that these days he was busy receiving representations from MLAs and MLCs that there was no cash in the ATMs in their respective areas.

“This is a new type of problem and our minister is in no way connected to this. The cash supply to the ATMs is in the hands of the bankers and RBI, but as a public representative, our minister cannot keep quiet,” said an official in the finance department. The official who preferred not to be quoted said that Rajender had written around a dozen letters to the RBI Governor on this issue since 8 November 2016.

The situation is no different in Hyderabad city too. Of the total 2,800 ATMs in and around Hyderabad city, at least 60% have been dry at any given point of time in the last four months. In neighbouring Andhra Pradesh, the situation is far worse, as most of the ATMs in rural areas and Vijayawada city too have gone dry. AP Finance Minister Yanamala Ramakrishnudu too wrote a letter to the RBI Governor in January, to increase cash supply to the state from the average Rs 3,000 crore per month to Rs 5,000 crore per month.

Customers are finding it difficult to get enough cash even at banks. Neither RBI’s Hyderabad zonal officials nor top executives of the banks are ready to speak on the exact reasons for the situation, but dropped hints that a combination of factors could be behind the cash crunch. A senior regional manager with SBI, Gunfoundry, in Hyderabad, explained: “Earlier, we used to disburse more or less equivalent amount of cash at the counters as we received in a day, but now the situation is different. Only 60% of the cash is coming back to us.” The SBI is struggling to keep all its 2,185 ATMs in the state filled with cash.