Money & Banking

ATMs to replace ₹2000 notes with ₹500 in a major reboot, says report

Hemani Sheth Mumbai | Updated on February 27, 2020 Published on February 26, 2020

In a significant exercise to revamp the country’s Automated Teller Machines ATMs, deployers will now reboot the machines replacing notes of ₹2000 with ₹500 notes, Business Standard reported on Wednesday.

While the denomination will remain a legal tender, it will gradually be put out of circulation according to the report.

Three out of four cassettes within the ATM will be filled with 500 notes. In contrast, the remaining cassette will be filled with ₹100 or ₹200 denominations, pulling ₹2000 notes out of the ATMs.

The ₹2000 notes which have already been replaced in many ATMs have not been put into play by banks for a while now and have been going either into currency chests or RBI vaults, the report said.

The percentage share of the ₹2000 banknotes in circulation has been taken over by ₹500 notes which held circulation share of 51 per cent in FY19, it said.

Furthermore, concerns were raised over the larger denomination notes after multiple reports of fake currency scams. According to the National Crime Records Bureau (NCRB) data, ₹2000 notes contributed over 60 per cent of the overall value of the seized counterfeit currency in 2018.

The move may benefit black and white label ATM deployers who may stand to earn more. This is because customers will have to conduct more transactions because of smaller denominations. However, with the current average amount for withdrawal being ₹3,600, experts say that it may increase the cost for deployers as smaller denominations will lead to more van trips for loading up the cash, the report said.

A few banks are already prepared for such changes. Deriving from its experience of the 2016 demonetization announcement where the Centre had banned the old denominations of 500 and 1000, one of India’s largest bank, the State Bank of India (SBI) had announced its plans to ‘future’ proof 6000 of its ATMs earlier this month as per a previous report.

It is looking to add adjustable cassette feature to its ATMs which will eliminate the cost of retrofitting the cassettes in case of change of denominations as it had to when the 1000 and 500 notes went out of circulation.

According to the specs given by SBI, the new ATMs will be able to recognize the year of issue of a currency note. It can be configured in a way that it can recognize notes printed in or up to a certain year based on which it may not dispense certain notes which are rejected.

The ₹2000 notes despite slowly being moved out of circulation will still remain a legal tender according to the Business Standard report.

Published on February 26, 2020
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