New Delhi [India], Apr. 20 (ANI): The State Bank of India (SBI) on Thursday said that the current and sudden surge in Currency in Circulation (CIC) could be superficial.

The leading Public Sector Bank (PSB) added that ATM withdrawals have declined in quarter four (Q4) on a sequential basis.

"The sudden surge in Currency in Circulation (CIC) is perplexing. The quarterly growth in Q4 FY18 shows that from the average growth of 4.4 percent of five years from FY12-16, the growth has shot up to eight percent. This is despite the fact that economy had achieved remonetisation and digital modes have also gained traction in a big way. On a monthly basis, an incremental pace in Currency in Circulation is three times higher in Q12018, compared with Q1 of the five previous years (FY12-16). Hence there is indeed some unusual trends in 2018," a report from the Economic Research Department of State Bank of India stated.

The report, however, noted if the hoarded notes are not back into circulation, the Reserve Bank of India (RBI) will have to print more notes to fix this 'artificial shortage'.

"However, in April in previous years too the currency in circulation had seen spikes, and the expansion in April 2018 till date is as usual. The average increase was 0.43 lakh crore for FY12-16. This year by mid-April this number has risen to 0.44 lakh crore. However, the catch is this can go up even further if the hoarded 2000 notes are not back into circulation as RBI will have to print more notes to fix this artificial shortage," it said.

Attributing the decline in ATM withdrawals to a 'seasonal phenomenon', the bank said that it believes that the current shortage could be superficial rather than real.

"Coming to withdrawals, the quarter-on-quarter (QoQ) ATM cash withdrawal trend indicates that there has been a continuous increase in withdrawal in Q1, Q2 and Q3 of FY18 (though increased in the second half). Interestingly, in Q4 of FY2018, there was a sequential decline, that has been also the case in some of the earlier years. Thus the decline in ATM withdrawal in Q4 could actually be a seasonal phenomenon apart from the usual reasons floating around like currency shortage. This strongly supports our contention that the current shortage could be superficial rather than real," the report concluded.

In the last two days, people from various pockets of the country, including Karnataka, Hyderabad, Madhya Pradesh, and Gujarat have expressed their dismay on ATMs running dry.

In this regard, the RBI on Tuesday clarified that all currency chests had sufficient amount of money, thereby dismissing the possibility of a cash crunch.

However, the central bank said printing of notes was being ramped up at its four presses as a precautionary measure. (ANI)

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