RBI has sufficient supplies of money and it is doing all it can to dispense the notes, says minister

Cash machines across the country will take several weeks to reset with new bills, Finance Minister Arun Jaitley said yesterday, as public anger mounted over a decision to pull the highest denomination notes from circulation.
People queued outside banks for the third day straight, trying to replace Rs500 and Rs1,000 notes after Prime Minister Narendra Modi announced they would no longer be legal tender in a blitz against corruption and tax evasion.
Scores of ATMs were shut on Friday and the ones that worked quickly ran dry as hundreds of thousands thronged to them.
Jaitley said cash machines could only dispense the newly-designed Rs500 and Rs2,000 after several weeks because of a technical issue.
“The technology takes about two-three weeks to recalibrate. The central switch needs to be changed and each machine needs to be altered individually, about 200,000 machines,” Jaitley told reporters in New Delhi.
“And because the size of the new notes is different, the machines are being recalibrated slowly.”
Jaitley reassured panicked citizens the Reserve Bank of India had sufficient supplies of money and that it was doing all it could to dispense the notes.
Long snaking lines and chaotic crowds at banks angered some who questioned why the government did not resolve the problem earlier.
“This is ridiculous. This is my second day. I gave up yesterday after standing in line for three hours. Couldn’t they have prepared ahead of time?,” J K
Chauhan, an insurance executive, said standing outside a New Delhi bank.
But Jaitley said ATMs could not have been altered ahead of time as it would have given “the whole game away.”
He said “the finance ministry is constantly monitoring the cash replacement exercise,” referring to another time-consuming process of replacing invalidated currency notes with new bills in the teller machines.
Rajiv Kaul, CEO and vice-chairman at CMS, one of India’s largest cash management companies, said the immediate focus after the government’s decision was to flush out the spiked currency notes from the machines.
The second step would be to replenish the machines with new notes. But before that, they had to “ensure every ATM recognises the new notes and manages multiple replenishments including those of lower denominations,” Kaul said.
This is where the challenge lies as the cash trays of all machines have to be replaced with newer ones that can handle new currency notes.
The machines would also need to be extensively tested before cash supply is restored.
“We believe the entire country’s ATM network will be streamlined to the new order in the next two to four weeks,” Kaul said.
Anuj Chauhan, a banker in Delhi, said a technician has to physically visit an ATM for reconfiguration that would normally take about four hours for each machine.
That means the reconfiguration of all 200,000 machines would take about 800,000 man hours.
If a technician completes two ATMs a day, companies managing the machines would all together need some 4,000 trained technicians to complete the process in 30 days.
Finding them would be another challenge.
Customers can exchange their old bills for new notes or deposit them in their accounts until December 30, but face major scrutiny by tax authorities if they cannot account for a sudden swell in their balance.
The government has said only tax dodgers will lose out from the bill-switch, the latest anti-corruption measure introduced by Modi.
Analysts broadly welcomed the decision, saying consumer spending would likely dip in the short-term as the new notes made their way into circulation but that the move would boost GDP in the long-term.