Cash crunch: SBI Research pegs shortfall at Rs 70,000 crore

Cash crunch: SBI Research pegs shortfall at Rs 70,000 crore

 

Mumbai: Even as the government and Reserve Bank have asserted that there is no currency shortage, SBI Research on Wednesay pegged the cash shortfall in the system at a whopping Rs 70,000 crore, which is a third of the monthly withdrawals at ATMs.
In a note that comes a day after reports of currency shortages made national headlines, it depended on nominal economic growth, currency with the public and the rise in digital transactions to arrive at the shortfall estimate. A 9.8 per cent nominal GDP growth would have taken the currency available with the public to Rs 19.4 trillion by March 2018, as against the actual availability of Rs 17.5 trillion, it said, stressing that the gap of Rs 1.9 trillion is not the shortfall.
The proportion of digital transactions stands at a low Rs 1.2 trillion only, much down the immediate months following the November 2016 note-ban. «The apparent shortfall thus could be around Rs 70,000 crore or even less,» it said. The note estimates that Rs 15,291 billion were withdrawn from ATMs through debit cards in the second half of FY18, which is a good 12.2 per cent growth over the previous six months. Reacting to reports of the currency shortage, it said the currency in circulation has breached the pre-note ban levels of Rs 17.84 trillion and added that such reports are «intriguing and defy logic».
The report explains that a part of the reason why the shortage is being felt could be the introduction and faster-acceleration in printing Rs 200 notes.
«This may have altered the demand for smaller denomination notes in a larger way to possibly substitute for the currency of larger denominations,» it said.