Counting on Convenience: RBI’s ATM Mandate Brings Small Notes to the Masses

Image Source: Business Standard

Indian banks are quickly re-calibrating ATMs to spit out more Rs 100 and Rs 200 notes, inching closer to the Reserve Bank of India's (RBI) ambitious target to increase access to small denomination currency by the September 30, 2025 deadline.

Key Highlights

RBI Instruction: RBI instructed in April 2025 that a minimum of 75% of all ATMs must dispense either Rs 100 or Rs 200 denomination from at least one cassette by September 30, 2025. This will be raised to 90% by March 31, 2026.

Rapid Progress: Through June 2025, 73% of ATMs nationwide are now configured to dispense these values, considerably higher than 65% in December 2024.

Why This Matters: Since 60% of consumer expenditure remains in cash form, particularly in rural and semi-urban regions, the shift goes a long way towards fulfilling the demand for smaller notes in everyday transactions.

Operational Changes: White Label ATM operators and banks have been making changes in their machines and software to comply with the new standards. Noncompliance with the targets would invite regulatory action by the RBI.

Public Convenience: The action is to reduce inconvenience with respect to the prevalence of Rs 500 denomination notes in ATMs such that people can easily get change for small transactions on a daily basis.

Fee Hikes: As part of the same action, the RBI has also increased the ATM transaction charge by Rs 2 per transaction to Rs 23 per transaction from May 1, 2025. The interchange fee has also increased, with GST charged.

Industry Reaction: Banking authorities and cash management businesses have hailed the move, calling it aligning regulatory intent with customer patterns and stopping black money circulation.

Source: Business Standard, Economic Times, Fortune India, Financial Express