History Beckons ATMs Across India; Guwahati To Be Equally Affected
GUWAHATI: These days, coming across a dysfunctional automated teller machine or ATM, is a common occurrence. Many a time one has to run from pillar to post to find an ATM that does dispense cash.
“I always face problems withdrawing cash from the ATM machines as most of the machines on the AK Azad Road are usually dysfunctional,” said Kedar Nath, a resident of Jyotikuchi.
Similarly, the residents of Guwahati across the city are facing problems in withdrawing cash. Looking at the recent trends, it can be observed that the maximum number of ATMs in the city remain mostly dysfunctional.
Harried consumers, who, in this age of automated transactions have more or less done away with the traditional banking system of withdrawing cash through cheques, are finding the situation difficult to cope with.
And in coming days the thing called ATM may soon become a part of history; the changes in regulatory landscape are making it unviable to operate ATMs and may lead to the closure of half of the 2.38 lakh machines in the country by March 2019, the Confederation of ATM Industry (CATMi) warned. And the northeastern states may account for the majority of this share.
“Service providers may be forced to close down almost 1.13 lakh ATMs across the country by March 2019. These numbers include approximately one lakh Off-Site ATMs and a little over 15,000 White Label ATMs,” the statement from the industry said.
White Label ATMs are operated by non-banking entities and provide the banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks. Non-banking entities that set up, own and operate ATMs are called "White Label ATM Operators" (WLAO). Off- Site machines are set up on a standalone basis. The bank has a place where there is only an ATM machine; such an ATM becomes an Off-Site ATM.
According to the Reserve Bank of India, more than 2,000 ATMs were closed in the ten months between May 2017 and February 2018 at different locations of the country.
The industry has reached a “tipping point,” CATMi added.
A majority of the ATMs which can be shut down will be in the non-urban areas, it said, underlining that this can impact the financial inclusion efforts as beneficiaries use the machines to withdraw government subsidies.
The industry body said that 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.
The new cash logistics and cassette swap method will alone result in costs of Rs 3,000 crores for the industry, it estimated.
It added that the ATM industry, including managed service providers, Brown-Label ATM deployers and White Label ATM operators (WLAO), is still reeling under the shock of demonetisation.
In case of Brown Label ATMs, service providers own the hardware of the ATM machine. The responsibility of identifying an ATM site, getting the lease agreement with landlord and supplying power to the ATM kiosk lies with the service provider. Thus, service provider takes the responsibility of maintenance of the ATM whereas the sponsor bank takes the responsibility of cash management and provides connectivity of the ATM to the banking network.
“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,” it said.
A source in a bank in Guwahati said that due to various costs the service providers refill ATM machines only once these days. Therefore the cash dries up early in the teller machines.
The only way to salvage the situation for the industry, according to the body, is if banks manage to bear the load of the additional cost of compliances.
“Unless ATM deployers are compensated by banks for making these investments, there is likely to be a scenario where contracts are surrendered, leading to large scale closure of ATMs,” it said.
Revenues for providing ATMs as a service are not growing at all due to very low ATM interchange charges and ever-increasing costs, the body said, adding that such changes in the landscape were not anticipated while signing contracts with the banks.
The WLAOs have accumulated losses and the compliance costs can result in over 15,000 machines run by them getting shut down, the industry body added.
Therefore, Guwahati will also get affected and the digital India dream of the Narendra Modi government still remains a distant mirage in Guwahati where people still prefer transactions in cash.
Guwahatians also keep complaining about non-availability of lower denomination currency notes of Rs 100 and Rs 200 in the ATMs.
A resident of Panjabari, Biplob Bhuyan said, “At the end of every month I keep searching for ATMs which can dispense Rs 100/200 notes, but it’s difficult to find one,” adding that he sometimes gets Rs 100 notes in some ATMs, but till date he has never got an ATM dispensing Rs 200 notes.
While the Reserve Bank of India (RBI) launched the 200-rupee note in August 2017 (according to media reports), it might have taken three months for ATMs in Guwahati to start dispensing the new denomination currency as it involves a huge exercise of recalibration of the ATMs. But even after two years people are not getting Rs 200 notes in the ATMs easily.
There are 300 State Bank of India (SBI) ATMs in Guwahati and including all other banks, there are around 1,000 ATMs across the city. But the cash withdrawal process remains a difficult task.