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Half the ATMs in India may shut down by March 2019 due to RBI regulations: CATMi

Almost 1,13,000 ATMs in India may be shut by March 2019 according to the Confederation of ATM Industry (CATMi), reports PTI. CATMi held RBI regulation responsible for the closure of half of India’s ATM machines. It said that the recent regulatory changes, including those on hardware and software upgrades, coupled with mandates on cash management standards and the cassette swap method of loading cash, will make ATM operations unviable resulting in their closure.

ATM operators are required to improve their physical and security infrastructure with hardware and software upgrades, as per an RBI notification issued in April. CATMi said that adhering to them would alone cost the ATM industry roughly Rs 3,000 crore. It further added that the ATM industry is reeling under the shock of demonetisation and the only way to salvage the situation for the industry is if banks “step in to bear the load of the additional cost of compliance.”

MediaNama has reached out CATMi for a comment and will update the story when they respond.

CATMi warned that out of 2,38,000 installed ATMs, approximately one lakh off-site ATMs and a little over 15,000 white label ATMs may be forced to shut. White label ATMs provide cash, but are owned and operated by non-banking companies and do not bear any labels. Off-site ATMs are set up on a standalone basis and not on the premises of a bank’s branch.

There are in all three types of ATMs in India including white label ones. The other two are brown label and bank owned ATMs. In brown label ATMs, service providers own the hardware of the ATM machine. They have the responsibility of identifying the ATM site, lease agreement with landlord, ensure power supply to ATM machine. Thus, the service provider takes the responsibility of maintaining the ATM whereas sponsor bank takes the responsibility of cash management and provides connectivity from the ATM to the banking network. The logo of the sponsor bank is displayed on brown label ATM kiosk premises.

Impact

CATMi said that the move will impact financial inclusion programme like the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme. The beneficiaries under the scheme withdraw their cash subsidies from ATMs. According to the PMJDY website, there are around 33.23 crore beneficiaries under the scheme. K Srinivas, CATMi director, told Quartz India that 5,00,000 jobs for people in the ATM and allied services are at risk if the issue is not resolved.

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ATM shutdowns

RBI data reveals that between December 2017 and August 2018, banks shut down over 1300 ATMs. According to RBI data,

  • In December 2017, there were 109,908 on-site ATMs and  97,128 off-site ATMs.
  • By August 2018, the the on-site ATMs went down by 1,994 to 107,914. The bank increased the off-site ATMs by 623 up to 97,751.

Also read: Regulators, government need to support ATMs for financial inclusion

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