The finance ministry on Wednesday said that the cash crunch situation faced by some states is being brought under control by restoring the non-functional bank ATMs. However, there is no clarity to the government as to why the shortage of cash has happened. On Tuesday, “cash deposits made in the banking system were Rs 5,000-6,000 crore more than the withdrawals made by the customers,” ministry sources said.

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There were reports of ATMs running of cash in some states including Delhi, Andhra Pradesh, Telangana, Karnataka, Bihar, Jharkhand, Madhya Pradesh, Maharashtra and Uttar Pradesh.

While the government on Tuesday accepted the shortage of cash in the ATMs in certain states, it has not been able to ascertain the exact reason behind the sudden spike.  Speculations such as hoarding of black money and linking it with Karnataka elections are doing rounds. The figures available with the government show that there has been a mismatch in demand and supply of currency in many states.

People also withdrew more money than they had deposited in the banks, the government data shows.

“The banks have been asked to replenish 80% of ATMs with cash by tomorrow. Earlier, only 62% ATMs were functioning and dispensing cash,” financial services secretary Rajiv Kumar told DNA Money.

“Only 5-6 states had the problem of cash shortage. The situation has now improved,” he said.

The finance ministry has been taking regular updates from the banks on cash situation.

According to the ministry sources, the cash dispensed by ATMs on Tuesday was Rs 8,468 crore as compared to Rs 6,662 crore dispensed by ATMs on earlier days when the cash crunch situation was acute.

“The ATMs are also being replenished with Rs 500 and Rs 2,000 notes to meet the demand,” Kumar said.

There has been an unusual spurt in withdrawals in the past 15-30 days in some states. “The ATMs have been dispensing mostly lower denomination currency. This also led to the ATMs going dry very fast,” said officials.

The frequency of replenishing ATMs with cash is normally limited to a few times, officials added.

The government figures show that there has been a mismatch between the withdrawals and the deposits made by customers in the banks.  In some states, it was as high as 100%, while the difference between the two is 20% in a normal day.

In Andhra Pradesh, people withdrew 120% more than they deposited while Telangana witnessed 130% jump in demand on April 6. People in Andhra Pradesh made cash withdrawals of Rs 483 crore while deposited only Rs 219 crore. Similarly, bank customers in Telangana withdrew Rs 265 crore and deposited Rs 115 crore. Karnataka reported 29% more withdrawals (Rs 454 crore) than cash deposits (Rs 115 crore).

On Monday, people withdrew Rs 29,475 crore from the banking system while they deposited only Rs 23,651 crore, sources said.

By Anjul Tomar, DNA Money