Indian expats in UAE: Watch out for these new ATM rules from March

Dubai: The Reserve Bank of India has been sending repeated reminders to banks and ATM operators – more so in recent months – to increase the availability of smaller currency denominations in cash machines, introducing phased targets that will take effect from March, according to an official circular.

The move is aimed at improving public access to frequently used ₹100 and ₹200 banknotes and does not involve any withdrawal or discontinuation of ₹500 notes, the central bank and the Indian government have reiterated.

Under the new guidelines issued by the Reserve Bank of India, banks and White Label ATM Operators (WLAOs) must ensure that their ATMs dispense either ₹100 or ₹200 notes from at least one cassette on a regular basis.

The RBI has set a phased implementation timeline.

The RBI said the step is part of its effort to enhance access to smaller denominations that are widely used for everyday transactions, particularly in retail payments and local transport.

The central bank did not announce any changes to the status of existing ₹500 banknotes.

The directive follows a wave of social media claims suggesting that ₹500 notes would be withdrawn or phased out by March 2026. Indian authorities have dismissed those claims as false.

India’s government information arm, the Press Information Bureau, had issued a public clarification this week stating that ₹500 notes remain legal tender.

"Some social media posts claim that the Reserve Bank of India will discontinue the circulation of ₹500 notes by March 2026," the PIB said in a fact-check statement posted on X.

“₹500 notes have not been discontinued and remain legal tender.” Officials said no notification has been issued by the RBI or the government regarding any withdrawal of the denomination.

According to the RBI, the ATM directive is designed to improve the mix of currency notes available to the public, not to eliminate higher-value notes.

ATMs may allocate one cassette to ₹100 or ₹200 notes more consistently under the new rules, while continuing to dispense ₹500 notes as before. The RBI has not instructed banks to stop issuing ₹500 notes through ATMs or bank branches.

For customers, this could mean receiving a higher proportion of smaller notes during withdrawals, particularly at locations where change availability has been a recurring issue.

Smaller notes are widely used for daily transactions, including groceries, transport, and local services. The RBI has previously highlighted complaints from the public about difficulties obtaining ₹100 and ₹200 notes, especially from ATMs that predominantly dispense higher denominations.

The central bank said improving availability would make cash usage more convenient without affecting the overall currency structure in circulation.

For UAE-based non-resident Indians who withdraw cash during visits to India or maintain domestic bank accounts, the RBI’s directive does not change the value or validity of ₹500 notes held abroad or in India.

₹500 notes can continue to be used for payments, deposits, and withdrawals without restriction. There is no requirement to exchange or deposit existing ₹500 notes, officials said.

Banks have also not announced any deadlines or limits related to holding or using the denomination.

Indian authorities have urged the public to rely on official RBI circulars and government statements rather than social media forwards or online videos.

Officials said rumours related to currency withdrawals tend to spread rapidly because of memories of the 2016 demonetisation exercise, despite the absence of any comparable policy move.

There has been no indication from the RBI of plans to demonetise or phase out any existing banknotes.

The key change for consumers will be the gradual adjustment of ATM dispensing patterns in the coming months. Banks and ATM operators are expected to comply with the RBI’s targets within the stated deadlines.

Beyond that, the RBI has made no announcements indicating broader changes to India’s currency policy.