We still need cash in ATManirbhar Bharat

Former US Federal Reserve chair Paul Volcker, who brought inflation to heel after the 1970s oil shock, had this to say in 2009 when fiendish financial engineering was devouring the global capital market. 'The most important financial innovation that I have seen the past 20 years is the automatic teller machine, that really helps people and prevents visits to the bank and it is a real convenience.' A generation that has stopped stepping into banks to deposit or withdraw money couldn't agree more. Yet, here we are in the online payment zamana and we still need cash. Much more of the stuff is actually sloshing around today, despite those handy little QR codes everywhere from 5-star restaurants to vegetable sellers' handcarts. And there is a sinking feeling every time the ATM monitor flashes that it's out of cash. This may be a small bother in metros where the next ATM is a block away. But empty ATMs can become a serious problem in the countryside where the nearest machine involves a few kilometres of travel.

Blame it on the economics of cash dispensers. There are expenses in setting them up and running them. The machines need air-conditioning. The cost of fuel to ferry cash is rising. And security guards need to be paid more each passing year. So, banks have pruned their ATM networks and are now throttling cash to the grid, according to Confederation of ATM Industry (CATMi). The effects are lopsided with the economics favouring shoving money into machines that empty out sooner, which typically happens in cities. RBI frowns on empty ATMs, but tends to act over egregious infractions.

There's a human cost to running out of cash, particularly if there is money sitting in the bank account. Rules for operating ATMs must be sensitive to this dimension beyond narrow economic principles. Not everyone has a smartphone, or is comfortable with going cash-minimum. They should not have to trudge to a bank to get their money. Banks can easily redesign their ATM networks to cater to the underserved.