Pay-and-use ATMs

     Print Edition: March 2012

Have you ever been unable to find an automated teller machine (ATM) in a rural area? With the Reserve Bank of India allowing non-bank entities to own and operate ATM networks, bank account holders in rural and semi-urban areas may find it easy to withdraw money.

These ATMs will not be owned by any individual bank. Customers of any bank can use such white-label ATMs, but they will have to pay a fee for using the service. All transactions through these ATMs will be charged. These ATMs will not come under the ambit of the RBI guideline which mandates five free transactions on ATMs of other banks.

"Non-bank entities proposing to set up white-label ATMs...should have a minimum net worth of Rs 100 crore at the time of making the application and on a continuing basis after the issue of the requisite authorisation," the RBI said.

The RBI has sought views of banks on white-label ATMs. According to the RBI data, most of the 87,000 ATMs in India are located in the metros and urban centres.

"Although there has been about 30 per cent year-on-year growth in the number of ATMs deployed in the country since 2008, ATM penetration...continues to be low compared with other countries," the RBI said.

In the beginning, white-label ATMs will accept only cards issued by banks. These ATMs will not accept cash deposits. Authorised corporate entities will have the freedom to choose the location of the ATMs. However, they will have to meet annual targets and the ratio of ATMs between big and small centres as decided by the RBI.

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