In King Cash's castle

Businesses in the cash handling and dispensing ecosystem are in disarray and the central bank will likely take a closer look at them, reports Raghu Mohan

- Raghu Mohan

Last week, the Reserve Bank of India (RBI) held a stock-taking meeting with the Cash Logistics Association (CLA). A key issue that figured in the discussions was ATM cassette-swaps lockable trays for cash replenishment, as opposed to loose loading. Introduced on April 18, 2018, they were to be added, the RBI had made clear, in a phased manner to cover "at least one-third of ATMs" every year. The process was to be completed by FY21.

Two extensions (the latest will lapse by the end of FY23), and four years after the first diktat, it appears the deadline may again be missed. And the RBI, Business Standard has learnt, would have preferred a better ground report. The CLA has submitted a "confidential update" to the banking regulator, which has also set up an internal committee to monitor developments.

The larger context in which the meeting between the RBI and CLA took place is the doubling of cash in circulation (CIC) to more than ₹31 trillion in FY22, or 13.13 per cent of GDP (and projected at ₹33 trillion for FY23, or 13.04 per cent of GDP), from ₹16 trillion and 11.6 per cent of GDP at the time of demonetisation. Ideally, a much higher CIC should have been a bonanza for cash-in-transit firms, ATM deployers, and cashout enablers at points of sale (micro ATMs).

These inter-linked businesses are, however, pulling in different directions.