Mumbai: With several representations made to the central bank, Ministry of Finance, and the National Payments Corporation of India (NPCI) for raising the interchange rate remaining inconclusive, the number of ATM machines across the country could see a fall, says the Confederation of ATM industry (CATMi), the apex body of the domestic ATM industry.
Inter-change, the rate charged by ATM operators for every transaction, is decided by a steering committee of the National Payments Corporation of India (NPCI) primarily comprising banks. However, public sector banks have been against hiking the interchange fee.
K Srinivas, Director CATMi and MD and CEO of BTI Payments, told FC, "We have been asking for higher interchange as the cost per transaction at an ATM is higher than the revenue per transaction. We have made several representations to the National Payments Corporation of India (NPCI), the Reserve Bank of India and to the Ministry of Finance but the discussions have not yielded any result so far. However we are hopeful that in the near future some solution will be worked out."
According to Srinivas while the total number of ATMs in the country are at 2.25 lakh (off-site and white label ATMs), this figure could reduce or remain stagnant even as the need for more ATMs rises, especially in rural areas and deep interiors.
Currently, the interchange is Rs 15 for cash transactions and Rs 5 for non-cash transactions done at an ATM. CATMi has asking for an increase in interchange to Rs 18 for cash transactions and Rs 8 for non-cash transactions as these were the rates in 2012. The cost of running an ATM should be mitigated said Srinivas.
According to him while the number of card customers are growing at 30 per cent the number of ATMs have been falling.
Closure of ATMs in rural areas could impact the financial inclusion programme of the government and impact millions of beneficiaries under the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme who withdraw subsidies in form of cash through ATMs.
CATMi said the forced closure is on account of unviability of operations brought about by recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash. CATMi estimates an additional outlay of about Rs 3,500 crore - only for complying 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 when no such requirements were in sight said CATMi.
