ATMs vital, cannot be shut down

ATMs vital, cannot be shut down


The warning given by the Confederation of ATM Industry that a large number of ATMs may be shut down by the middle of next year may be a pressure tactic or a statement of possibility. Either way, it should be taken seriously. There are about 2.38 lakh ATMs in the country. The confederation, which is an umbrella body of ATM operators, says that about half of them may have to be shut down as the operators will not be able to bear the high cost of compliance of the new ATM management guidelines. The guidelines were laid down by the Reserve Bank of India in April this year. They relate to the maintenance of minimum cash balance, the infrastructure for distribution of cash, security at the ATMs, etc. Some guidelines about the computer systems in the ATMs were added later. The Ministry of Home Affairs has also issued some security-related directions. 

A good part of the cash distribution functions of banks is now carried out by ATMs. Many of them are in the rural areas and serve consumers in places where banks do not have branches. About Rs 2.75 lakh crore is dispensed by them in a month. Digital and mobile payment systems will take a lot of time to gain traction. ATMs have an important role in the financial inclusion programme, and the closing down of half of them or even a much less number may have an impact similar to that of demonetisation. So, shutting them down is not an option in the present circumstances. 

It is likely that the federation has presented an extreme scenario to highlight the high cost of implementation of the guidelines. Some of the norms are already being complied with, but some new guidelines will mean an additional cost of about Rs 5,000 crore. The expenditure on cash logistics will account for a major part of it. But the regulations formulated by the RBI are necessary for safety and security and for protection of the interests of customers and banks. They were finalised after discussions with all stakeholders. There cannot be any compromise on their implementation, and security and ease of transactions should get the highest priority. The confederation has said that the banks want to pass on the additional cost to the service providers. The operators have in any case to work with the banks for implementation of the new standards. There may be a case for consideration of the cost issue sympathetically and for relaxation of the timeline given by the RBI for implementation. That can be done without shutting down any ATM. 

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