Why Cash crunch again? Reasons mentioned, Solutions suggested

     Written by : SMTV24x7 | Tue, Apr 17, 2018, 04:45 PM

Why Cash crunch again? Reasons mentioned, Solutions suggested

New Delhi, Apr 17: Despite the huge claims about the usage of e-cash (or) e-wallets, cash is still used by millions and billions of people across India. Following that the ATMs in some parts of the country are now running dry. This means we can say that the cash crunch is back once again.

Also, People have complained about a cash crunch in Telangana, Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Rajasthan and Uttar Pradesh, in a reminder of long queues and non-functioning machines post demonetization in November 2016.

Union Finance Minister Arun Jaitley responded:

"Overall there is more than the adequate currency in circulation and also available with the Banks. The temporary shortage caused by 'sudden and unusual increase' in some areas is being tackled quickly."

Besides, the Finance Ministry added that both the government and Reserve Bank of India have taken all steps to meet this unusual demand.

Point to be discussed.....

# There is a state election ahead in Karnataka and to our surprise, there is some cash crunch felt there as well. However, The government is checking with banks and the Reserve Bank of India to ensure an adequate supply of currency.

@Reasons for cash crunch again....might be (exclusively from business correspondents)

1. Bank officials said that people have been withdrawing cash more than they require at the beginning of the month. They blamed the cash shortage over fewer deposits and more withdrawals.

2. They also believe the RBI has intentionally reduced cash supply to banks to force people to make digital payments and increase cashless transactions.

3. Somehow there is a strong counter-argument amongst some sectors of people that there is an impact of year-end March 2018 and also due to the season of harvest there has been more necessity for cash flow.

4. There were simultaneous festivals across India including Baisakhi Bihu and other festivals and the government sources claim that this could be the reason because the demand for cash rose suddenly in certain parts of the country.

@Solutions suggested:

# The Reserve Bank of India (RBI) - the autonomous body takes care of the whole thing. As far as the it is concerned, the data comes to the govt. But, RBI looks after the cash & Bank situation and that it is why it is the responsibility of it to refill the ATMs.

Finally, it can be said that this is partly a failure of Government and RBI as well. According to the information from sources that last week Govt and RBI held a meeting looking into the possibility of this happening and now this happened!!!