People are withdrawing more money from ATM these days, know what is the reason behind this

There has been a significant increase in the amount of cash withdrawals from bank branches and ATMs in FY 2021 so far. The currency in circulation has increased at the rate of 21 percent, which is a decade high. This information has been revealed by the RBI data.

But the level of cash in the economy increases with the economy. The ratio of cash to GDP is a more accurate measure, whether the increase in cash withdrawals is due to hoarding or normal growth. This ratio reverted to the historical trend of 12 per cent in FY 2020, following the decline in demonetisation. But the recent increase in the currency’s holdings means that this ratio could increase to 14 to 15 percent of GDP in FY 2021.

Since last November, cash withdrawals have increased by about 10 percent. At the same time, the UPI payment has increased by about 20 percent during this period. Cash withdrawals continue to be high even after growth in digital payments and UPI transactions have touched two billion levels.

If we talk about the average ticket size, then according to the RBI data, the average ticket size in the UPI transaction was Rs 1549 in November 2019, which increased to Rs 1850 in August 2020. At the same time, talk about withdrawal from ATM, here the average ticket size was 4507 in November 2019, which increased to Rs 4959 in August 2020. 

Know why more withdrawals are happening from ATM

1. Indians withdrew significantly less from ATMs during the onset of the Corona virus epidemic and at the time of lockdown. He withdrew the cash for his basic needs and saved the cash. The reason behind this was the basic tendency of Indians to save cash in times of crisis. Transactions declined in late March and April, May. After this, this condition gradually improved from the month of June. With the easing of lockdown restrictions and the opening up of the economy, people started withdrawing from ATMs for other expenses besides their basic expenses.

2. People did not get a chance to celebrate during the lockdown. So as the festive season approached, people shopped for themselves, their families and their homes and this led to an increase in withdrawals from ATMs.

3. Meanwhile, there was also a trend that people made very small withdrawals worth 100 to 300 rupees from ATMs. The big reason for this is that people resorted to UPI and digital payments for small transactions.

4. People were hesitant to get out of the house due to high risk of epidemic infection and lockdown. Even doing work from home instead of going to office. Subsequently, when business activity increased and people lost corona infection, they started spending for their needs.