Mumbai: About 50% of Automated Teller Machines (ATMs) are likely to stop functioning by March 2019 due to unviability of operations, the Confederation of ATM Industry (CATMi) warned on Wednesday.
The apprehension if becomes a reality, will hit hard both urban and rural population, dealing a blow to the digitization policy. It will also most likely lead to cash crunch and long queues outside banks seen after the note ban in November 2016.
India currently has approximately 238,000 ATMs installed, of them around 113,000 ATMs, including 100,000 off-site and more than 15,000 white label ATMs, are expected to down shutters in March 2019, according to CATMi Director V Balasubramanian.
“A large number of ATMs in non-urban locations are likely to shut down due to unviability of operations. If this happens, the financial inclusion programme would be severely impacted as millions of beneficiaries under the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, who withdraw subsidies in the form of cash through ATMs, may find their neighbourhood ATM shut,” he added.
The Reserve Bank of India (RBI) had in April mandated a minimum net worth of Rs.100 crore for service providers and their sub-contractors handling cash management logistics on behalf of banks. It also directed cash vans transporting money to have CCTVs, GPS connectivity, tubeless tyres, hooters and wireless communication systems. Approximately 100,000 off-site ATMs, and over 15,000 non-bank ATMs could shut down. According to Reserve Bank of India (RBI) data, India had 221,492 ATMs as of September-end, according to Live Mint.
“The situation has further deteriorated now due to the additional compliance requirements that call for a huge cost outlay. The service providers do not have the financial means to meet such massive costs and may be forced to shut down these ATMs, unless banks step in to bear the load of the additional cost of compliance.”
According to CATMI, an estimated outlay of about ₹3,500 crore is needed to comply with the new cash logistics and cassette swap method. “These requirements were never anticipated by the industry participants at the time of signing contracts with the banks. Many of these agreements were inked four to five years ago,” it said.
Of the approximately 238,000 ATMs in India, an average 10% are non-functional at any given point of time for various reasons. "However, to adequately cater to the entire country's population, the need is almost three-four times more, or around a million ATMs", CATMi said.
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