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C. Shivkumar

Bangalore , Sept. 22

ALL the large banks in the country have begun working on setting up bank-neutral Automatic Teller Machine (ATM) network to maximise return on investments.

Banking sources said that they have employed India Switch Company Ltd (ISCL) for the purpose. Mr Mani Mamallan, Chief Operating Officer of ISCL, confirmed the move, but said, "Inter bank issues and settlement processes still need to be resolved." But it is not just ISCL alone that is venturing into the business of bank-neutral ATMs.

Sources said companies such as Euronet, which operates ATM service in Europe, and Bankchoice of Australia were also in the process of doing due diligence.

Bank-neutral networks were conceived in view of the multiplicity of networks in the country. Almost all large banks have already made substantial investments for setting up an ATM network, resulting in multiple dispensing centres within certain regions, though utilisation rates were still on the low side. Bankers said that the focus, therefore, was to restrict additional investments and maximise the utilisation/return on the existing investments.

Some banks have entered into alliances among themselves. These alliances still did not allow for a wider usage of the ATM facilities for customers. With a bank-neutral network, cross usage of ATM cards would be possible, the sources said.

The bigger advantage, however, was that a bank-neutral ATM network, would obviate the need for large investments. The investments are currently in the region of about Rs 10 lakh for an ATM machine. In addition, there are recurring costs incurred in network charges, power and cash dispensation costs, entailing a cost of about Rs 1 lakh per month. Few banks have actually recovered even their operating costs, which was one of the major reasons for creating the alliances among the networks.

"The best option for us is go through a shared network as a cost-effective option," the banker said. The beneficiaries of this idea are also likely to be co-operative banks who have also been wanting to set up a ATM network in the rural areas though have not been able to cough up the funds needed for making the investments. Instead for bank-neutral networks, the fees would be levied on a per transaction basis.

Mr Mamallan said, "The fee will be about Rs 20 per transaction." This fee would be borne by the banks themselves, though the banks have the option of passing them on to the customers. But as utilisation rates increase, the fees themselves are also expected to fall, the sources added.

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