“Cash continues to be in strong demand even post demonetisation” according to Sanjeev Patel, chief executive officer of the Tata Communication Payment Solutions Ltd. Though reducing cash usage was the main purpose of the action, TCPSL shows that opposite is happening: currency in circulation has grown from ₹17.97 crore before demonetisation to ₹19.57 crore at present. Sanjeev Patel also added that although 44% of the urban population have access to digital transaction facilities and « there are more than a dozen ways to pay digitally », only 16% of the rural population transacts online.
As cash demand rises, so do cash withdrawal volumes. India is nevertheless underequipped when it comes to ATMs: in March 2018, the recorded amount of ATMs was 222’066, equal to 17 per 100’000 people; which is very few compared to the US where there are 137 per 100’000 people. To cater to the entire country’s population, there is a need for three to four times more ATMs.
In April this year, the Reserve Bank of India (RBI) imposed stringent guidelines for ATM service providers and their contractors, generating additional costs. These constraints are likely to cause 50% of the ATMs to be shut down by March 2019. The machines that are expected to be most affected are white label ATMs – operated by non-banking financial institutions – mostly impacting the rural and semi-urban areas where white labels represent respectively 42% and 32% of ATM availability. There are over 15’000 while label ATMs in India.