Govt: Dont panic about the cash problem | Fusion - WeRIndia

Govt: Dont panic about the cash problem

Govt: Dont panic about the cash problem

Over the last few weeks, there has been an ATM crisis in several areas in Telangana and Andhra Pradesh. More recently, there have been similar reports coming in from Bihar, Gujarat, and Maharashtra.

In response to these reports, the government is checking in with the Reserve Bank of India (RBI) and other banks to ensure that there is an adequate supply of currency in circulation. Thankfully, sources in the Ministry of Finance have come out and said that this cash crunch is not alarming.

There is no need for anyone to panic, since there is an adequate amount of currency in circulation.

The Minister of Finance, Arun Jaitley, has blamed the situation on a “sudden and unusual increase” in cash withdrawal.

A provision in the proposed Financial Resolution and Deposit Insurance Bill (FRDI Bill) sparked a rumor that caused this increase. The rumor sparked from this certain provision was that, if the FRDI Bill became a law, money would be less safe in banks.

The government did clarify that this rumor was false. They said that there could be no such consequence from this bill. However, people rushed to ATMs and banks to withdraw their money anyway.

Due to this sudden increase in cash withdrawal, many ATMs across Telangana and Andhra Pradesh have run out of cash and gone out of service. In both states, banks were witnessing long queues of people asking for closures of fixed deposits and withdrawals from saving bank accounts.

If more people continue to rush to withdraw their money from banks and ATMs, it could even lead to a bank run. In other states, the ATM problem is believed to be caused by people hoarding their ₹2,000 notes.

People are also currently demanding more currency due to a dip in deposit growth. However, both the banks and the Ministry of Finance are ensuring the people that there is no shortage of currency in circulation and there is no need to panic.

Image credit: Image by Prasanta Sahoo from Pixabay (Free for commercial use)

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