Until last year, most housewives were asking the vendors if they had a change of ₹500 notes. Remember?

It was not possible to do minute monetary dealings with big bills like a ₹500 note. Recognising this, the Reserve Bank of India (RBI) issued a circular in April 2024 directing banks to ensure a sufficient supply of ₹100 and ₹200 notes through ATMs.

The aim was to make daily transactions smoother for the average Indian and to improve access to lower denomination currency across both urban and rural areas. Now, with the September 30, 2025, deadline nearing, a significant shift is visible in ATM operations.

Use of Lower Denomination Currency

For a large portion of India's population—especially the middle- and lower-income groups—daily cash transactions are a normal thing. According to a Frost and Sullivan Report, around 60% of all household spending in India is still done through cash.

Denominations of ₹100 and ₹200 are preferred for groceries, transport, utilities, and other small expenses. Without access to smaller notes, individuals often face difficulty in obtaining change for higher denominations like ₹500.

Refer to this table to understand why small currency notes are crucial for daily life:

User Group	Spending Pattern	Need for ₹100/₹200 Notes
Middle-Class Households	Daily grocery, school fees, fuel	Easy for exact payments without needing change
Street Vendors & Retailers	High-volume, low-ticket transactions	Helps in giving and receiving exact change
Senior Citizens	Prefer cash over digital methods	Simpler transactions using small denomination notes
Rural Households	Cash-dependent economies	Better suited for local market transactions

However, now you don’t have to ask, “Chutta hai kya bhaiya?”

73% of ATMs Now Dispense ₹100 and ₹200 Notes

There’s been a major jump in the availability of lower denomination notes via ATMs. In December 2024, only 65% of ATMs were able to dispense ₹100 and ₹200 notes. However, as per the RBI directive and with increasing demand from the public, this number has now risen to 73% as of June 2025.

Read More – How to Take Money from an ATM

Banks have been reconfiguring their ATM cassettes to meet the deadline. Public sector banks, in particular, have made significant improvements, ensuring accessibility even in Tier-3 and Tier-4 cities.

Private banks are catching up with major upgrades underway.

ATM Deployment Progress

Month	% of ATMs Dispensing ₹100/₹200 Notes
December 2024	65%
March 2025	69%
June 2025	73%
RBI Target	75% by September 30, 2025
Final Target	90% by March 2026

RBI Increases ATM Interchange Fees

To facilitate banks in maintaining and upgrading ATMs for low denomination availability, the RBI has revised the ATM interchange fee structure effective from May 1, 2025.

The interchange fee is the amount paid by the card-issuing bank to the ATM-operating bank when a customer withdraws money from another bank’s ATM.

New vs Old ATM Interchange Fees

Transaction Type	Previous Fee	Revised Fee (from May 1, 2025)
Financial Transaction	₹17	₹21
Non-Financial Transaction	₹6	₹8

This fee hike is aimed at incentivising banks to maintain high-quality ATM infrastructure and ensure wider geographical coverage, especially for dispensing smaller notes.

What is the Free Transaction Policy?

Despite the hike in interchange fees, customers still enjoy free ATM withdrawals under the Free Transaction Policy. As per RBI norms:

Customers can make up to 5 free transactions per month from their own bank’s ATMs.
Additionally, they can make 3 free transactions in metro cities and 5 in non-metros from other bank ATMs.
Beyond the free limit, charges up to ₹21 per transaction may apply (depending on bank policies).

Also Read - How to Deposit Cash in an ATM – Step-by-Step Guide

This policy ensures that the average consumer still benefits from cost-effective access to cash, while banks balance the operational costs through the revised fee model.

Conclusion

With 73% of ATMs now equipped to dispense ₹100 and ₹200 notes, India is moving closer to a more inclusive and convenient cash management system. The RBI’s proactive measures—ranging from pushing banks to recalibrate ATMs to adjusting interchange fees—highlight its commitment to financial accessibility for all.

As the September 30 deadline nears, consumers can expect smoother cash transactions, especially in semi-urban and rural areas, where small change often makes a big difference.

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