New Hybrid ATM: Given the persistent shortage of smaller denomination notes like 10, 20, and 50 rupees in the country, the central government is now taking steps towards a permanent solution to this problem. While demonetization did boost digital payments, a large segment of the population still relies on cash for their daily needs. The unavailability of smaller notes causes inconvenience for both shopkeepers and customers.
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Government considering new schemes
According to discussions within the government, several new proposals are being worked on to increase the availability of smaller denomination notes. These include machines that can dispense 10, 20, and 50 rupee notes as needed. A new type of hybrid ATM has also been proposed, which will facilitate the exchange of larger notes for smaller notes and coins. There are also plans to pressure the Reserve Bank of India (RBI) to increase the printing of smaller denomination notes.
Pilot project being tested in Mumbai
According to government sources, an initial model of a machine that dispenses smaller notes is undergoing testing as a pilot project in Mumbai. If this experiment is successful and receives approval, the system could be implemented nationwide in the future. These machines are planned to be installed in public places with high foot traffic, such as markets, hospitals, transportation hubs, and government offices.
How the hybrid ATM works
The hybrid ATM is considered a combination of a traditional ATM and a coin vending machine. Through these machines, consumers will be able to exchange larger denomination notes for smaller notes and coins in a single transaction. The RBI has already tested such an ATM at a Bank of Baroda branch in Mumbai to assess the feasibility of this model.
Why is there a need for smaller denomination notes?
There has been widespread public dissatisfaction for a long time regarding the shortage of smaller denomination notes. Shopkeepers, in particular, face difficulties in providing the correct change for ₹500 notes, leading to delays in transactions or rounding up of prices. This problem is more prevalent in urban informal sectors and semi-urban areas where access to digital payments is still limited.
What do RBI figures show?
According to the central bank’s data, a large portion of the total currency value in circulation is held in ₹500 notes. These notes also account for a significant share in terms of quantity. In contrast, while smaller denomination notes appear sufficient in number, their share in the total value is very low. This imbalance is a major reason for the difficulties faced in everyday transactions.
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Experts’ opinions
Economic experts believe that increasing the availability of smaller denomination notes will significantly ease daily transactions, especially in rural areas where feature phones are still widely used, and digital payment facilities are limited. However, some banking sector experts say that simply installing machines will not be enough. The printing, distribution, and recycling system for old notes also needs to be strengthened.