In a move that’s likely to affect millions of ATM users across India, the Reserve Bank of India (RBI) has issued a new directive concerning the ₹100 note. While the note itself is not being phased out or demonetised, how and when it will be dispensed from ATMs is about to change significantly.
The announcement has stirred interest and some confusion among the public, but the changes are actually aimed at making life easier for cash users, especially those who rely on smaller denominations in day-to-day transactions.
The Core of the New RBI Rule
The RBI has instructed all banks and White Label ATM operators to ensure that their machines are configured to regularly dispense ₹100 or ₹200 denomination notes. This is not just a suggestion but a regulatory requirement with a clear timeline for implementation. The central bank wants to ensure that smaller denominations are more widely available to the public through ATMs, which until now have often prioritized higher denomination notes like ₹500 or even ₹2000.
According to the timeline issued by the RBI, all banks are expected to ensure that at least 75 percent of their ATMs have one dedicated cassette configured to dispense either ₹100 or ₹200 notes by September 30, 2025. This deadline is part of a phased approach to ensure operational feasibility and to give banks enough time to make the necessary technical adjustments. By March 31, 2026, this compliance level is expected to rise to 90 percent across the entire ATM network in India.
Why the Change is Being Introduced
For years, one of the common complaints from ATM users has been that machines often dispense only high denomination notes. While withdrawing ₹2000 or ₹1000 may seem convenient for some, it becomes a challenge when people need smaller amounts or when they need change for smaller payments. Imagine trying to buy vegetables, pay a rickshaw fare, or make a purchase at a local kirana store with only ₹500 or ₹2000 notes in hand. Many such small vendors simply do not have the change to accommodate that, and the lack of ₹100 and ₹200 notes becomes a real inconvenience.
This RBI initiative aims to improve the circulation of smaller notes and make transactions smoother for both individuals and businesses. It is particularly useful for daily wage workers, small shopkeepers, and rural residents who rely more on cash transactions than digital payments. By increasing the availability of ₹100 and ₹200 notes through ATMs, the RBI is trying to address a practical issue that affects millions of people on a daily basis.
What Will Not Be Changing
It is important to clarify that this new rule has nothing to do with demonetisation or the withdrawal of the ₹100 note from circulation. The ₹100 note remains valid legal tender and will continue to be so. There are no plans to replace it with a new design or to pull it out of the economy. Similarly, the ₹200 note, which was introduced after the 2016 demonetisation, will also continue to be in circulation. The focus of the rule is purely on how these denominations are dispensed through ATMs, not on their legal status or physical design.
Also worth noting is that this rule does not impose any new restrictions or conditions on how much you can withdraw from ATMs. The daily limits set by individual banks will still apply. What changes is the mix of notes you might receive during your transaction. You may start seeing more ₹100 and ₹200 notes in your hands instead of receiving all ₹500 notes, which has been the trend in most ATMs lately.
How This Will Affect Regular ATM Users
For most people, this change will come as a welcome improvement. If you’re someone who frequently visits the ATM, especially for smaller withdrawals, you’ve probably found yourself stuck with larger notes even when you only needed a small amount of cash. With the new RBI rule coming into effect gradually, you can expect to start receiving smaller denominations more frequently in the months ahead.
Initially, there may be some variation between banks and cities in how quickly this change is adopted. Metropolitan cities may see faster implementation, while rural and semi-urban areas could take a little longer as ATM infrastructure is upgraded and reconfigured. However, by early 2026, most users across the country should have access to ATMs that dispense smaller notes, making cash transactions more flexible and convenient.
Impact on Businesses and Small Vendors
For business owners, especially small and medium retailers, this new rule could make a significant difference. One of the most common operational headaches is the lack of change for customers. When people come in with ₹500 or ₹2000 notes for small purchases, it forces shopkeepers to scramble for change or refuse sales altogether. The increased availability of ₹100 and ₹200 notes will likely ease this burden and streamline cash handling at the point of sale.
Street vendors, local transport operators, and anyone involved in cash-intensive occupations will benefit from a better flow of smaller denomination currency. It could also reduce the reliance on banks for acquiring change or depositing large notes for smaller ones. In effect, it promotes smoother transactions and fewer conflicts between customers and vendors over the availability of change.
What Banks Are Expected to Do
Banks have been given a clear mandate, and they are now expected to make the necessary technical and logistical adjustments to their ATM systems. This includes configuring at least one cassette in each ATM to be loaded with ₹100 or ₹200 notes. Some banks might choose to focus on ₹100, others on ₹200, and some may offer both, depending on the location and customer demand.
As this process unfolds, customers may experience temporary service interruptions at some ATMs during reconfiguration. However, banks are likely to inform customers in advance and manage the changes with minimal disruption. Customers are encouraged to stay in touch with their bank’s notifications and updates, especially regarding ATM services at their preferred branches.
Looking Ahead to a More Convenient ATM Experience
The new RBI rule regarding ₹100 and ₹200 notes is part of a broader effort to improve cash management and enhance customer convenience. It is not a drastic policy shift but rather a thoughtful upgrade aimed at addressing a long-standing issue in the Indian banking system. By ensuring that smaller denomination notes are more easily available through ATMs, the RBI is paving the way for smoother cash transactions, especially in areas where digital payments have not fully penetrated.
As we approach the 2025 deadline for partial implementation and the 2026 goal for full compliance, it’s a good time for the public to become aware of the changes and adjust expectations accordingly. Whether you are a frequent ATM user or a small business owner, these changes are ultimately designed to make your daily cash dealings more manageable.
Disclaimer: This article is for informational purposes only. The content is based on publicly available updates and does not constitute financial or legal advice. Readers are advised to consult official RBI notifications or their respective banks for the most accurate and updated information regarding currency or ATM-related changes.