RBI Mandates Wider Availability of ₹100 and ₹200 Notes Ahead of September Deadline

RBI Mandate Reshapes Cash Dispensing at ATMs Nationwide

In a concerted effort to improve the circulation of smaller currency, banks across India are making significant progress in reconfiguring their ATMs to dispense ₹100 and ₹200 notes. This initiative follows a directive from the Reserve Bank of India (RBI) aimed at addressing the persistent shortage of "chhutta," or small change, which impacts daily transactions for millions. The move signals a strategic push to enhance the convenience of cash for everyday purchases, particularly in semi-urban and rural markets where cash remains a dominant mode of payment.

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The RBI has set clear, staggered deadlines for this transition. In a circular from late April 2025, the central bank instructed all banks and White Label ATM (WLA) operators to ensure that at least 75% of their machines are dispensing lower-denomination notes from at least one cassette by September 30, 2025. This target will increase to 90% by March 31, 2026. According to CMS Info Systems, the country's largest cash management company, compliance is well underway, with 73% of its managed ATMs already meeting the initial requirement as of this month—a notable increase from 65% in December 2024.

The primary goal of this mandate is to support consumers and micro-merchants who often struggle with transactions involving larger currency notes. "With 60 per cent of consumer expenditure still anchored in cash, enabling availability of ₹100 and ₹200 notes directly addresses day-to-day transactional needs," noted an executive from a cash logistics management organisation. By making smaller notes more accessible, the RBI aims to smooth out cash flow for small-value purchases.

However, this shift presents a potential trade-off for consumers. The convenience of accessing smaller notes may lead to more frequent ATM visits. This could push users beyond their monthly free transaction limits—three in metro cities and five in non-metros. Exceeding these limits has become more costly since May 1, 2025, when the RBI approved an increase in the interchange fee for cash withdrawals to ₹19 per transaction. Furthermore, as legal experts point out, carrying large quantities of small notes for bigger expenses can be cumbersome, potentially nudging consumers toward digital payment methods.

This policy places the choice firmly in the hands of the public, balancing the renewed convenience of cash against the efficiency of digital alternatives. As banks work to meet the upcoming deadlines, consumers will need to strategically manage their withdrawals to navigate the new landscape of ATM fees and currency availability.