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India Is Facing a Risky Cash Crunch

  • Government addressing “unusual spurt in demand” for cash
  • Squeeze comes as latest blow for banking sector hit by frauds
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Bloomberg’s Jeanette Rodrigues reports on the cash shortage in India.(Source: Bloomberg)
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India’s cash machines are running dry, leaving policy makers and bankers scrambling to assuage the public and prevent perception about the nation’s fraud-hit financial system from worsening.

As the banknote shortage spread across several states, the government finally addressed the issue in a statement Tuesday, where it cited an “unusual spurt in demand” for cash. The Finance Ministry rolled out top officials to assure Indians -- still stuck with memories about Prime Minister’s Narendra Modi’s shock demonetization in 2016 -- that while there’s ample amounts of currency available, steps are also being taken to print more and the broader banking system is healthy.