Why Rs 4,000 is a better ATM withdrawal limit than Rs 4,500

Use Class 3 Math For Fewer Rejections And Shorter Queues

We Indians have been through this over the past two months. Punch in a request for Rs 2,500 or Rs 4,500 — the first two withdrawal limits set by the government through the demonetization weeks — at an ATM, and the transaction will usually be declined. Not because the government has suddenly changed its mind, but the Rs 500 note is still in short supply.

If a machine is loaded with only Rs 2000 notes, how can it dispense a figure that is NOT a multiple of 2,000? It’s simple maths taught at the class 3 level in school, and if you decide to dust old textbooks now, just look for the chapter on ‘least common multiple’ or LCM.

Why is this important? Because ignoring it while setting withdrawal limits leads to long queues.

Cash continues to be in short supply and everybody wants to withdraw their day’s full quota at once. Which means, everybody in an ATM queue nowadays is trying to withdraw Rs 4,500 in one go.

As long as a machine has Rs 500 notes, there is no problem, but once they run out, the transaction time doubles. Every user first makes a futile attempt to withdraw Rs 4,500, and then tries again to get Rs 4,000. There are many just-literate users who get confused easily and hold up the queue much longer. Result: long waiting times and frayed tempers.

The government knows best the supply position of Rs 500 notes, and until it is sure that machines will not run out of these mid-morning, it should set withdrawal limits in multiples of 2,000. So, for now, Rs 4,000 is a better daily limit than Rs 4,500. ATMs fed with both kinds of notes will dispense a mix, while others won’t disappoint users either.

The next revision, hopefully, will be to Rs 6,000 or Rs 8,000 a day, not some frustrating odd number.



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