Monday, 7 May 2018

ATMs dry


 

Amidst reports of a cash crunch from different parts of the country, Union Finance Minister Arun Jaitley said the government was “tackling the issue quickly” to overcome a “temporary shortage” caused by a sudden spurt in demand. But the truth is that almost all ATM's in the country didn't go dry overnight. In most places ATM's were short of cash since 3 months. And RBI claims that its vaults had stock of over Rs. 2 lakh crores of currency. Only our Lutyen's Nero's deliberately ignored as a step towards less cash society.
  • Cash is coined liberty, fundamental right of citizens. Cash is a form of wealth and citizen's right to hold their wealth in any form can't be constrained.
  • As long as people are poor and less educated and governments are irresponsible, inefficient and blatantly corrupt in public spending, efforts for cashless transactions or higher tax realizations will be thwarted by its citizens.
  • While the shortage of currency is about Rs. 70,000 crores as estimated by SBI, RBI vaults stocked over Rs. 2 lakh crores of currency to meet any contingency. But deliberately, this was not put to use and people were subjected to hardships during past 3 months. Who is responsible for this mess?
  • While 130% cash withdrawals compared to cash deposits for any bank is normal, last few months banks experienced more 200% cash withdrawals. This could be attributed to crop harvesting season, marriages, elections in some states etc. which are well known.
  • But the most prominent reason is that people are exhibiting loss of trust in Banks due to high NPAs, centre's draft FRDI bill with 'bail in' clause and centre's reluctance in not increasing deposit insurance amount from Rs. 1 lakh per depositor (fixed in 1990's) to proposed Rs.10 lakhs per depositor.
  • FM Jaitley has attributed the situation to a "sudden and unusual increase" of cash in "some areas". Which areas? Poll-bound areas? Why? Nobody is answering that and nobody is clearing the air on what could have caused the "unusual increase".
  • One reason could be that since all the ATMs have not been recalibrated to dispense the new Rs.200 and Rs.50 notes, while at the same time Rs 2,000 notes are being phased out (speculation only), cash is finding it difficult to make its way to the people. 

Modi & Jaitley must understand that the government is duty bound to provide as much cash as people want and the government and the RBI cannot arbitrarily control the supply of cash to pursue their ulterior motives. People hoarding cash only reflects their loss of faith in government, RBI and Banking system. If they can't provide even printed fiat currency, Modi, Jaitley and Urjit Patel are unfit in their positions and must be ejected out.


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