The proposals include a new type of machine that will dispense 10, 20, and 50 rupee notes on demand. A “hybrid ATM” is also proposed that will convert large notes into smaller notes and coins. Additionally, there are plans to pressure the central bank (RBI) to print more small denomination notes.
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Hybrid ATMs: The central government is exploring ways to make smaller denomination currency notes (such as 10, 20, and 50 rupees) more widely available. This move is aimed at addressing the persistent shortage that continues to plague everyday cash transactions nearly a decade after demonetization.
What do the new proposals include?
Live Mint reported this news, citing two officials familiar with discussions within the government. The proposals include a new type of machine that will dispense 10, 20, and 50 rupee notes on demand. A ‘hybrid ATM’ is also proposed that can convert large notes into smaller notes and coins. The plan is to pressure the central bank (RBI) to print more small denomination notes.
A pilot project is underway.
The first official explained that a prototype of a machine that dispenses small denomination notes is undergoing testing as part of a pilot project in Mumbai. Once approved, the system is expected to be implemented nationally. These machines will be installed in high-traffic public places such as traffic hubs, markets, hospitals, and government offices.
How will a hybrid ATM work?
The second official explained that a hybrid ATM would combine the functionality of a traditional ATM and a coin vending machine. These machines will allow users to exchange large notes for smaller notes and coins in a single transaction. The RBI has already tested the hybrid ATM model at a Bank of Baroda branch in Mumbai.
What is the need for these efforts?
This initiative comes amid growing public discontent over the shortage of small notes for everyday payments. This could alleviate the inconvenience faced by shopkeepers who often face difficulty in exchanging ₹500 notes, leading to delays in transactions or forced price negotiations.
This move could benefit large sections of the population who still rely on cash, especially in urban informal sectors and semi-urban areas, where digital payment acceptance is uneven.
What do the figures say?
RBI data shows that ₹500 notes account for 41.2% of the currency in circulation and 86% of the total value. In comparison, smaller denomination notes (₹2, ₹5, ₹10, ₹20, and ₹50) account for approximately 38% of the total currency volume, but only 3.1% of the total value. The remaining part consists of Rs 100 and Rs 200 notes.
What Experts Are Saying
Devendra Pant, chief economist at India Ratings and Research, said that having more small notes in circulation will help with daily transactions, especially in rural areas where feature phones (which lack digital transaction support) are still widely used.
However, some believe that machines alone are not the solution. A banking sector executive said that without adequate supply, machines alone cannot solve the problem. Printing, logistics, and recycling of small notes will also need to be increased simultaneously.
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