Demonetisation: All you need to know about ATM recalibration

Finance Minister Arun Jaitley on Thursday said there was no dearth of cash in the aftermath of the Narendra Modi-led central government’s decision to demonetise Rs 500 and Rs 1,000 currency notes. 

Attacking Opposition leaders’ criticism of the demonetisation move and demand for its rollback, Jaitley said the Reserve Bank of India (RBI) was supplying an adequate amount of currency to banks. He also said: “Some 22,500 ATMs will be recalibrated today to allow withdrawal of Rs 100, Rs 500 and the Rs 2,000 notes. Nearly 200,000 ATMs exist as of now. (Some of these have been recalibrated to support dispensing of new currency notes).”

 

But what does recalibration of ATMs mean?

Prime Minister Narendra Modi said on the evening of November 8 that all Rs 500 and Rs 1,000 currency notes would cease to be legal tender from midnight. Instead, newly minted Rs 2,000 notes, Rs 100, Rs 50 and other notes of smaller denomination would be in use in the country. The move was estimated to wipe out from the system nearly 86% of all currency notes in circulation. 

Since the demonetisation announcement, the government, RBI, and banks, have been working overtime to supply Rs 100 and new Rs 500 and Rs 2,000 notes. However, the ground situation, with long queues outside banks and ATM centres has been frustrating for most Indians. There have been reports of people facing many hardships due to paucity of valid cash and people even dying while waiting in long queues. Many people in a desperate need for cash have, in fact, chosen to camp outside banks and ATM centres from midnight. The situation in rural areas has been reported to be even worse, with fewer banks and ATMs available. 

However, the most difficult challenge faced by the government, banks and the RBI is that most of existing ATMs in the country do not support new currency notes and need to be recalibrated for the purpose. 

At present, there are over 200,000 ATMs across the country. Recalibration is a process by which changes are made to cash-delivering machines so that they can deliver the new notes. 

Different cassettes inside an ATM machine hold currencies of different dimensions. Older Rs 500 and Rs 1,000 notes were larger than the new Rs 500 and Rs 2,000 notes. Therefore, to dispense new notes, adjustments need to be made in these cassettes as well.

Besides cassettes, the software of ATMs have to be modified as well. Besides, since the government has put a limit on the amount an ATM can deliver in transactions made during the interim period of transition, the recalibration process has to also take this factor into account.

These changes involve physical and mechanical work, and carrying out this process at every ATM is a time-consuming process. Add to that the number of ATMs that are out of service, either because of workload or low maintenance. Those have to be repaired as well. These are the factors that have complicated the issue further.

READ OUR FULL COVERAGE OF THE MODI GOVT'S DEMONETISATION MOVE