Hybrid ATMs Under Pilot Testing
According to officials familiar with the matter, the government is considering ATMs that can dispense low-denomination notes such as ₹10, ₹20 and ₹50, in addition to the commonly available ₹100 and ₹500 notes.
A pilot project testing low-denomination dispensing machines is currently underway in Mumbai. If approved, the system is expected to be scaled up nationally, with hybrid ATMs installed at high-footfall locations.
Focus on Public Utility Locations
The proposed hybrid ATMs may be set up at transport hubs, markets, hospitals and government offices, where demand for small change remains high. These machines are expected to allow users to exchange large-value notes for smaller denominations.
Officials have indicated that the Reserve Bank of India may also be encouraged to increase printing of small-denomination currency to support the initiative.
Cash Still Crucial for Informal Economy
Despite the explosive growth of UPI transactions, cash continues to play a vital role in India’s informal economy and semi-urban and rural areas, where digital connectivity can be inconsistent.
Shopkeepers and street vendors often struggle to provide change for ₹500 notes, which remain the most commonly circulated high-value currency note.
Experts Flag Supply Challenges
Economists and banking experts have cautioned that hybrid ATMs alone may not solve the problem unless supported by adequate supply and circulation of smaller notes.
“Printing, logistics and recirculation of small currency will need to be scaled up simultaneously,” a senior bank executive noted, highlighting operational challenges.
Balancing Cash and Digital Push
The proposal comes at a time when India is witnessing record volumes of UPI transactions, reinforcing the government’s push towards a less-cash economy.
However, experts suggest a targeted rollout of hybrid ATMs. “These models should be deployed selectively where digital infrastructure is still evolving,” said financial services experts, warning that large-scale deployment may be uneconomical for banks.
Policy Tightrope Ahead
The initiative highlights the policy challenge of balancing India’s digital payments success with the everyday realities of cash-dependent users.
Further clarity on regulatory approvals and nationwide rollout is expected once the Mumbai pilot is evaluated.
