India bracing for another cash crisis
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Ordinary Indians cannot hope for a payments respite just yet. Indeed, the Reserve BankSee Central bank. More of India (India’s central bank), announced that it will soon issue new Rs 100 banknotes which will be different in colour and size from those currently in circulation. Heard like that, it might not sound so appalling. Yet, with each changeThis is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More in denominationEach individual value in a series of banknotes or coins. More, comes a recalibration of ATM machines – particularly in this case where the size of the new notes do not correspond to today’s Rd 100. And recalibration is synonym to costly and time consuming manoeuvres that are expected to cause another wave of cashMoney in physical form such as banknotes and coins. More outages and public outrage.
The Indian government’s stubborn desire to force its population to become cashless by all means unfortunately has a particularly adverse effect on those that already have very little to their name: the poor and rural populations. Indeed, as stated by a private bank executive requesting to speak on condition of anonymity, “The government and the RBI need to realise that cash rules and so people need ATMs and bank branches, and they can’t wish cash away only because they want to. Therefore, these things need to be better planned to avoid an adverse impact on the industry.”
India just recently surfaced from a cash crisis after rumours of bank closures caused people to rush to stash their earnings away. It now appears that a similar scenario is about to occur for a new set of reasons. According to Quartz, “adjusting all the 200,000-odd ATMs in India to the new notes will take around a year and cost over Rs100 crore ($14.5 million)” in a country where ATM access is already scarce, equal to one cash machine per 5,500 Indians compared to Canada where that number equals 545: this could mean to beginning of yet another crisis.
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