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RBI’s Penalty Policy May Cause Stir In Rural Banks

Meanwhile, the industry body has written to the banking regulator and asked them to review its decision. As per them, an ATM can usually run out of cash six times every month and approximately 50 per cent of the 213,000 ATMs are faced with this issue.

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The latest decision of the Reserve Bank of India (RBI) to impose Rs. 10,000 fine on banks, if ATMs run dry for over 10 hours may give tough times to many banks in the country, especially in rural and remote areas, believes the Indian Bank officials.  

Himachal Pradesh State Co-operative Bank Official Amit Sharma, who works in a rural branch said, "The major problem of this RBI policy is that banks in rural areas can not maintain the regular cash flow. There are remote areas where transportation is also the issue that results in delayed money movement. Apart from that, the  ATMs of rural banks have limited cash retention like between 5 lakh to 10 lakh which can run out of cash very fast. Also, in case a three to four days bank holiday comes along, we will not be able to manage the continuous cash flow.”

Meanwhile, the industry body has written to the banking regulator and asked them to review its decision. As per them, an ATM can usually run out of cash six times every month and approximately  50 per cent of the 213,000 ATMs are faced with this issue. 

“Since there are predictions of a possible third wave and authorities put up a complete lockdown in specific areas, how are we supposed to follow these guidelines there? In case this is implemented by the RBI, there is a possibility that several banks will close down the existing ATMs,” Sharma added. 

The guidelines come when banks are amidst carrying out RBI's 2018 circular, which expects them to ship cash in cassettes, adhering to the government's endorsed hours of the day. As of now, most ATMs are filled up by open money top-up by stacking cash in the machines on the spot. To get rid of the current or existing system, RBI has requested that banks need to make sure lockable cassettes are swapped at the time of cash replenishment in ATMs. This is expected to be implemented by March 2022.

We tried to reach the rural branch of a UCO bank, however, the officials were not able to comment on the RBI's latest policy which will be implemented from October this year. However, a lot of banking officials have raised concerns that the RBI policy is not going to fix the problem of the availability of cash in ATMs. 

As per the RBI policy, Indian banks will have to make sure that there is proper cash forecasting and ATM-fit currency is available at the required time. But, as per the Ministry Of Home Affairs (MHA), banks can do cash movement from 8 PM onwards in urban areas. The time limit for the cash movement is 6 PM for semi-urban areas and 4 PM for rural areas. Hence, that is arising as a big problem. 


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