Word from the Front-line: Rajiv Kaul

Mumbai, India – December 05, 2016

On a regular day, our company services and replenishes 30,000+ of our 55,000 ATMs, all over India. However, in the past four days we have at best been able to manage 10,000 – 13,000 ATMs. At a time when we geared up our internal teams to rise to the challenge we are working at 40% output, despite teams working double duty. We at CMS, have completed every activity of loading given to us by the banks with currency that is available. Us simply doing 100% and more isn’t good enough.

The initial delays were mostly due to technical reasons. A change at the back-end switch to ensure that the old high denomination notes are not disbursed and withdrawals are capped at Rs. 2,000/-, took over 36 hours, resulting in delayed access to the ATM network and possibly increasing the anxiety and uncertainty among general public. Further, the ATM cassettes that stock the currency until re-calibrated (a 30-40-minute process on-site) cannot take a full capacity of 100 rupee notes. This essentially means that each ATM disburses 25% of the number of notes it could earlier, and can technically run out of cash after 100 withdrawals with current limits. We have also been crippled by delays in the supply chain. Our cash officials end up waiting at the bank branches along with the other regular customers to get the cash for loading into ATMs. This is costing us about 2 – 3 hours, on an average, of productive time. In addition, there is a lot of pressure from the banks to focus on deposits of the high denomination notes. In a meeting with the RBI, it was brought out that the priority should be first on ATM replenishment and not deposits but many banks are continuing to push for the deposit of these notes. The system is again forcing our cash officials to wait in line for hours to make these deposits after clearing out the ATMs. These are some problems which have made this worse and are totally avoidable.

In the currency supply chain eco-system, there are 3 important entities that play a significant role in fixing this. First, the RBI which needs to ensure there is enough supply of the right currency, and adequately across the country. Second, Banks and their branches and staff need to work in a streamlined and efficient manner. Third, Cash management companies, which are responsible for the logistics of the cash cycle need to get the currency velocity to reach its highest. Cash management companies being at the frontline have been looking at redressal of these problems.

We want to offer the following suggestions, which could fix the issue faster.

1. Instead of focusing on all the 2 lakh ATMs, we should focus first on ensuring that at least 100,000 ATMs are running round the clock, stocked with sufficient currency. It will help us have a focused plan of making frequent trips to replenish these, since cash outs are as big a problem now as bringing the whole network alive. A steady set of ATMs that are mostly up and running will give people the confidence that cash is available, instead of running helter-skelter and wasting a lot of time.

2. Currency issuance should be centralized from a few currency chests in each city instead of the many branches for each bank in each city. In a metro city, this is currently more than 150 – 200 branches and critical resources are wasting time, going to each one and waiting in line. We need to cut this lag down. The only state where this is working smoothly as of now is Jammu & Kashmir, where the nodal currency chest belongs to the J&K Bank and they have been ensuring that everyday money is available at 5:30 am in the morning.

3. Next, the banks need to be focused on replenishments and not on deposits. There is a 50 day window for deposits but banks seem to be chasing the headlines on how much money has been collected each day.

4. Since Monday is a Bank Holiday things might immediately get worse before they get better. Perhaps RBI could consider dispensing more than Rs. 2000/- per transaction to reduce repeated runs on the ATM or bank branches. This could be specific to the ATM network as a means of reducing the crowds at banks branches.

In most countries around the world, cash management companies share a strong partnership with the banks and the central banks. However, in India, the central bank has kept the sector at an arm’s length. Over the past few days, some of our teams have been attacked when as they have gone about their job of stocking up the ATMs. These teams are one of the first on the ground during national disasters like floods and earthquakes. We hope the Indian Bank Association and RBI consider Cash management companies as vital partners in this challenging situation. In a recent example, a country which replaced nearly its entire currency in circulation was Canada in 2013 and despite Bank of Canada’s intent to fast-track the process, it took them six months. However, the close partnership with cash management companies, ensured that the humongous process was relatively painless for it’s citizens.

As the largest cash management company in India and the world’s fourth largest ATM cash management company, we have deployed a lot of technology and infrastructure on the ground in the past 6 years to reach the length and breadth of the country. We cover 92% of India’s districts today. We are very keen to do all we can to help and act on a war footing and work thrice as hard to get the cash cycle back to where it was. Within 36 hours by Nov 11, we had already collected the old high denomination notes from 90% of the 55,000 ATMs we manage. It can be done. Removing the bottle-necks in an inefficient eco-system is the first step towards achieving the vision of our Hon. Prime Minister.

– Rajiv Kaul, CEO & Executive Vice Chairman, CMS Info Systems.

An edited version of this article also appeared as part of Expert Views in TOI. Read the published version on: https://timesofindia.indiatimes.com/india/expert-view-problems-forcing-us-to-work-at-40-cash-management-company-head/articleshow/55408215.cms