There is no shortage of cash in the country, yet why is the ‘No Cash’ board visible on the ATM? The reason for this is not the shortage of notes, but the irregularities in the system of transferring cash from banks to ATMs and the increasing use of UPI.
New Delhi: Nowadays, it has become common to go to an ATM and return after seeing the ‘No Cash’ board. But is there really a shortage of notes in the country? Government figures tell a different story. According to the Reserve Bank (RBI), the currency present in the market is at a record level. It has reached Rs 42.56 lakh crore with an annual growth of 12%. Meaning, the problem is not of lack of cash. The real reason is the major flaws in the system that transfers money from banks to ATMs and then to customers.
1. Error in filling cash in ATM
Independent ATM operators who look after the work of filling cash in ATMs are not getting the full amount from the banks. Commercial banks are giving them much less cash than before. In November 2025, these operators were getting 80% of the cash requirement. But it dropped to 64% in March 2026 and only 57% in April-May 2026. Rs 94,000 crore is required every month to run the country’s ATM network, but the operators are getting only Rs 54,000 crore. This is the reason why many ATMs remain empty for days.
2. UPI changed the whole game
There has been a huge surge in transactions through UPI. This has had a direct impact on the use of ATM. Compared to last year, ATM usage has decreased by more than 10%. The contracts of ATM operators were made on the assumption that ATM usage would decline by only 3% every year. Their main income comes from the fees they receive on every transaction. When the number of customers has reduced, running ATMs has become a big loss-making deal for these operators.
3. Expenditure increased, customer behavior also changed
The cost of running an ATM, like fuel, security and employee salaries, is increasing day by day. On top of that, from April 1, banks increased the charge on every transaction beyond the free limit to Rs 23. Many banks have also included cardless ATM withdrawals through UPI in the free limit. The result was that customers reduced the number of times they visited ATMs, but whenever they did, they started withdrawing large amounts of money at one go. This changed way of people has spoiled the entire mathematics of the system of estimating when and how much cash to keep in the ATM.
What do RBI and government say?
Some economic experts believe that the sale of foreign exchange reserves by the RBI to stop the fall of the rupee led to a temporary shortage of cash in the banking system. However, RBI says that notes are being printed as per the need and banks also have enough cash. The shortage of cash in ATMs is due to supply chain disruptions and contract problems with independent agencies. The government has also rejected the fake news that it was being said that RBI is stopping the supply of Rs 500 notes through ATMs. Officials are trying to overcome the problems caused by the abundance of Rs 500 notes and shortage of smaller notes like Rs 10, 20, 50. Special ATMs and hybrid ATMs that dispense small notes will also be installed in crowded places like bus stands and markets.