The Central Government is currently planning to implement “hybrid ATMS” in high footfall locations across the country to address the the shortage of small denomination notes and coins driven by the digitisation and UPI.
The new automated teller machines will reportedly be able to exchange your Rs 500 note for smaller ones like Rs 10, 20, and 50 along with coins on demand, The Mint reported, citing sources who are close to the matter. The plan is already being tested in Mumbai with a pilot project.
"A prototype of low-denomination currency dispensing machines is currently being tested under a pilot project in Mumbai," one of the sources told Mint. “Once approved, the system will be expected to be scaled up nationally”, they said.
The ATMs will be implemented in locations with high foot traffic, such as transport hubs, markets, hospitals, and government offices.
This could also urge the RBI, which is also involved in the initiative, to print more small denomination currency notes, the source said.
Currently, the Rs 500 notes are the most circulated. Shopkeepers and public transport workers often have difficulties providing smaller change in exchange for higher denomination notes during daily transactions.
The move is expected to benefit the informal economy, as the semi-urban areas still rely on hard cash.
There are, however, challenges to the plan.
“The machines (Hybrid ATMs) alone cannot solve the problem unless backed by an adequate supply,” an unnamed bank executive told Mint. “Printing, logistics, and recirculation of smaller notes will have to be scaled up in parallel.”
The initiative also goes against the push for more digitisation.
