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ACCORDING TO RBI DATA, India is seeing a strange rise in cash in the market while also conducting more digital payments than ever. In the last decade, from FY17 to FY26, the cash in circulation rose from ₹13 lakh crore to ₹41 lakh crore.

This period follows immediately after the BJP government’s demonetization in 2016, which banned the old ₹500 and ₹1000 notes in circulation. However, the volume of banknotes have increased since then from 10,000 crore to 17,000 crore pieces in the same period.

Despite this massive surge, ATMs are shutting down.  After hitting a peak of 2.19 Lakh ATMs in FY23, the number has been in the decline ever since, now standing at 2.09 lakh in FY26. This correlates with the decline of debit card withdrawals from ATMs, from 685 crore transactions amounting to ₹32.6 lakh crore in FY23 to 524 crore transactions worth ₹28.6 lakh crore in FY26.

According to a Navbharat Times report, the Confederation of ATM Industry (CATMi) has warned of the ATM cash shortage to the Reserve Bank of India and the State Bank of India—which runs the largest network of ATMs in the country at 65,000. Indian Banks Association (IBA) has also flagged a significant cash supply gap, saying SBI is only providing 55-65% of the required cash to the ATMs in April 2026, as opposed to 80% supply in November 2025.

CATMi says that SBI is sending excessive cash to Tier-1 cities, sometimes more than necessary. As a result, this has caused a cash crisis in ATMs in rural and semi-urban areas (tier-2 and tier-3 cities). 

Deepak Kumar, Senior Manager at Punjab & Sind Bank, flags the challenges ATMs maintenance face in 2026. He said, “Hiring round-the-clock security is expensive, and there are no clear guidelines. RBI-mandated e-surveillance systems add to costs. Even outsourcing ATM maintenance has become difficult. Recently, a major service provider went into liquidation, disrupting operations of thousands of ATMs.”

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According to The Economic Times, ATM operators have already warned of the cash crisis in a meeting with RBI and SBI on June 5, 2026. Many ATM operators corroborate that the issue is majorly linked with SBI. When ATMs remain shut due to cash shortages, operators lose revenue from the related transaction fees and interchange fees. Due to this, CATMi, representing the ATM industry, reports that the sector has already suffered losses exceeding ₹100 crore and demands compensation for the same.

An ATM company CEO spoke anonymously to NavBharat Times. He said, “This issue is particularly linked to SBI. Smaller banks are managing the situation, but SBI’s challenges have intensified. Most of the cash is being routed to metro cities, reducing cash supply in other regions.”  The industry also saw a rise in fuel prices, which resulted in an increase in the cost of cash transport to the machines, contributing to the loss. 

While the primary goal of demonetization, to seize black money in circulation, was not realized, it has led to a significant rise in digital payments. This, in turn, has created another challenge in ATM operations as the general demand for withdrawals declines. However, this creates the paradox of how the cash in circulation keeps rising despite the cashless transactions.

Experts believe that, while more transactions are being carried out through the digital medium, there is still an increase in cash holdings, which is tough to eradicate. As of May 29, 2026, ₹42.56 lakh crore worth of cash is in circulation as per RBI data. While there is no estimate of how much of this is black, the general notion of having cash at home correlates to security and emergency holdings.

In modern India, post-demonetization, the cash debate is unparalleled. While digits on your screen may constitute major transactions, the security of banknotes at home is still seen as something worth preserving among the masses. However, SBI’s failure to replenish ATMs in tier-2 and tier-3 areas still remains a major concern. 

RBI Governor Sanjay Malhotra in a statement on June 5, 2026, said that they do have the resources to replenish ATMs if shortages arise. He said RBI prepares annual currency requirements according to estimates and provides banks accordingly. After the latest monetary policy announcement on June 5, Malhotra addressed the issue, saying, “We will ensure if there is a shortage, we have sufficient currency to go and fill and refill the ATMs and bank branches.”

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