Bengaluru Cash Crisis: Shortage of Notes Hits Banks and ATMs as Withdrawals Surge Ahead of Elections

Cash has almost disappeared from ATMs in several areas of Bengaluru city. Citizens are going from one ATM to another to withdraw money, and finding Rs 500 notes is difficult in the tech city. The sudden rise in cash demand has led to a shortage in banks, and as a result, ATMs are not being refilled adequately, according to a report by the Economic Times.

At present, both government and private banks are facing a cash crunch in Bengaluru. It is not that banks are not receiving cash, but the spike in withdrawals has made it difficult for them to load enough money into ATMs. This has led to very low replenishment in machines.

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Bank officials say large withdrawals are happening from current and overdraft accounts. Contractors in construction, real estate and government civil projects are reportedly withdrawing huge sums to pay workers’ salaries in cash. Normally, withdrawn money returns to banks within a few days, but the return cycle has slowed significantly in the past few weeks.

Why Are Banks Facing Cash Shortage?

Cash withdrawals have increased in recent days, making it difficult to withdraw money from banks and ATMs. 

The key reasons are:

1. More money going out than coming in

Withdrawals have surged, but deposits are not keeping pace. Contractors are withdrawing large amounts to pay labourers in cash, and this money is not returning to banks at the usual pace.

2. Impact of upcoming elections

Experts believe the upcoming elections are a major factor behind the shortage. Bengaluru Municipal Corporation elections are expected before June 30 as per the Supreme Court orders. Assembly elections are due in Kerala, Tamil Nadu, West Bengal, Assam and Puducherry.

Once the election schedule is announced, movement of cash becomes difficult, leading to speculation that political parties and candidates are withdrawing funds in advance.

Rs 500 Notes Become Scarce

There is a significant shortage of Rs 500 notes, which are crucial for daily transactions. Though banks are prioritising ATM refills over branch withdrawals, availability remains limited. Banks have sought assistance from the Reserve Bank of India (RBI).

Authorities are urging the public to use digital payment methods such as UPI and net banking to reduce pressure on cash supply.