Mumbai: The Confederation of ATM Industry (CATMi) has warned that due to “unviability” of operations owing to “recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash” almost every second ATM of your locality may be forced to shut down by March 2019. The impct primarily will be in ATMs in non-urban locations. Currently India has 2,38,000 ATMs, around 1,13,000 ATMs, including 1,00,000 off-site and more than 15,000 white label ATMs, are expected to down shutters.
Primary Impact will be in non-urban areas
The CATMi has predicted the closure of ATMs may result in long queues and chaos at ATMs. “”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 centres, resulting in snaky queues and chaos akin to post-demonetisation,” Mr Balasubramanian, director of the ATM industry body said. “Our members, who include the ATM managed service providers (MSPs), brown-label ATM deployers (BLAs) and White Label ATM Operators (WLAOs), are already reeling under the financial impact caused by huge losses during and post demonetisation as cash supply was impacted and remained inconsistent for months,” Balasubramanian said.
“Compliance costs are unbearable”
ATM body says the situation had further deteriorated now due to the additional compliance requirements that call for a huge cost outlay. In April this year, the Reserve Bank of India (RBI) imposed stringent guidelines for ATMs service providers or their contractors followed by the Union Ministry of Home Affairs issuing similar directives vide gazette notification to be implemented by February 9. These 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 later in June came the diktat for upgradation of the software from WindowXP to Window10.
“To implement all these security, 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.
“The ATM industry in India has reached a tipping point, and 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,”
The CATMi, which is a registered non-profit trade association formed by ATM industry leaders to foster the growth of the industry, estimates an additional outlay of about Rs 3,500 crore – only for complying with the new cash logistics and cassette swap method. These compliance costs may also see the 15,000-plus white label ATMs going out of business.
“The ATM industry in India has reached a tipping point, and 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,” Balasubramanian added.