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10% of the ATMs will now dispense ₹ 100 notes exclusively

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The Reserve Bank of India has now directed banks in the country to calibrate their ATMs in such a way that 10% of the ATMs dispense   100 notes exclusively. This direction comes on the back of a review conducted by RBI.

The increased use of ATMs by citizens has no doubt helped reduce the rush in retail bank branches. But citizens have often complained about the availability of the lower denomination ₹ 100 note in the ATMs. Volume wise, the ₹ 100 notes is the second most widely circulated after the ₹ 10 note. This makes it all the more important for ATMs to dispense the ₹ 100 note. The Reserve Bank of India (RBI) has now directed banks to have 10% of the ATMs to dispense ₹ 100 exclusively.

Incentives for dispensing lower denomination notes

Performance based incentives to various bank branches under the ‘Currency Distribution & Exchange Scheme (CDES)’ was launched by the RBI in 2008. The scheme envisages extending certain incentives to those bank branches that provide better customer service with regard to exchange of notes and coins, in keeping with the objectives of Clean Note Policy. The following services are eligible under this scheme

  • Opening of and maintaining currency chests at centers having population of less than 1 lakh in under banked States
  • Exchange of soiled notes/ adjudication of mutilated banknotes over the counter at bank branches
  • Distribution of coins over counter
  • Installation of Machines which extend cash related retail services to the public like –
    • Cash Recyclers;
    • ATMs dispensing lower denomination notes (i.e. up to denomination ₹ 100)

Incentives in the form of capital & revenue cost are extended to bank branches for extending the above services.

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 Very few Banks have ATMs dispensing lower denomination notes

 The RBI has recently reviewed the steps taken by banks for installing ATMs dispensing lower denomination banknotes. The review concluded that very few banks had taken initiatives in setting up ATMs dispensing lower denomination notes including ₹ 100 denomination banknotes.

The RBI in a bid to meet the objectives of the ‘Clean Note Policy’ and to ensure that the requirement of citizens is met, has directed the banks to increase the dispensation of ₹ 100 notes through ATMs since these notes are widely used in retail use.

The RBI has decided to conduct a pilot project wherein 10% of the ATMs in the country will be calibrated to dispense Rs.100 banknotes exclusively. It has directed the banks to configure/calibrate 10% of their ATMs to facilitate this arrangement. Banks have been given 15 days to complete the exercise and send a report to RBI.

Banks have been given freedom to select the branches with the sample covering relatively large number of centres/states. Banks are also directed to send the feedback on this pilot after two months.

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Featured Image: ATMs in India

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