More than 50% of ATM machines in India will see a shut down coming March 2019. The reason stated by the Confederation of ATM industry (CATMi) is the unavailability of operations. This decision will be a blow to both the urban and rural population. As of now, India has roughly 238,000 ATMs, out of which around 113,000 ATMs including 100,00 off-site and 15,000 white label ATMs will be shut down, said CATMi Director V Balasubramanian.
“This would severely impact millions of beneficiaries under the Pradhan Mantri Jan Dhan Yojana who withdraw subsidies in form of cash through ATMs, besides urban centers, resulting in snaky queues and chaos akin to post-demonetization,” Mr. Balasubramanian told IANS.
The Need
This extreme step has been a result of the recent regulatory guidelines for ATM’s hardware and software upgrades, the mandates on cash management standards and the cassette swap method for loading cash, which would need a huge investment from the industry. As per Mr. Balasubramanian, the implementation of cassette swap alone would need a minimum investment of Rs 3,500 crore.
In April this year, the Reserve Bank of India (RBI) imposed some strict guidelines for ATMs service providers which include a minimum net worth requirement of Rs. 100 crore, minimum fleet size of 300 fully-equipped cash vans, two custodians and two armed guards plus a driver, GPS-CCTV, and up-gradation of the software from WindowXP to Window10.
The Consequences
“To implement all these securities, software-hardware directive would entail an additional cost of minimum Rs. 150,000 per ATM per month. This works out to astronomical figures for all the 238,000 ATMs in the country,” Mr. Balasubramanian pointed out.
“However, the RBI-MHA directives are to be implemented by the banks which must bear the costs, but they are not willing to discuss the issue, leaving us to fend for ourselves. Accordingly, from January onwards, we shall progressively start shutting down the ATMs,” he said.
However, to adequately cater to the entire country’s population, the need is almost three-four times more or around a million ATMs, says CATMi.
The Ground Realities
People in states like Bihar, West Bengal, MP, UP, Maharastra have to travel sometimes up to 40 km to access an ATM. Barring the metro cities, ATMs still are a big deal for the majority of people.
“Moreover, as per official data, barely 30 percent of bank account holders in the country regularly use their ATM cards… the others prefer cash transactions. There are problems of infrastructure and connectivity which hamper the growth of ATMs network,” Balasubramanian said.
India has among the lowest ATM penetration globally, averaging 8.9 ATMs per 100,000 population, compared to Brazil’s 119.6, Thailand’s 78, South Africa’s 60 and Malaysia’s 56.4.
