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N.S. Vageesh

Permission for 2,054 off-site machines given so far, says RBI

Chennai , Aug. 15

Bankers are unhappy with the restrictions imposed on unlimited expansion of their ATM network. Since September 2005, banks need to get the prior permission of the Reserve Bank of India, whenever they want to put up new off-site (a site away from the branch) ATMs. They didn't need this permission earlier.

Banks talked of using ATMs to overcome physical and regulatory limitations on branch expansion. The branch would be the hub, while the ATMs would be the spokes that would increase their reach and mop up resources.

Now, banks find the new arrangement — of having to ask permission — a bit irksome. No one wants to go on record with any criticism of the RBI. But there is certainly resentment about why the RBI should license ATMs in the first place.

There are about 20,000 ATMs in the country now. A little more than half that number is installed off-site.

A top banker said, "India needs more ATMs. We need one in every road corner. We need to increase reach. India has 20,000 ATMs now; can afford 10 times the number. Frankly, regulating ATM is not required. It is a licensed commodity now."

So, have banks found their ATM expansion plans affected? No clear answers again. Or as bureaucrats say when confronted with difficult questions, "Yes and No."

What do manufacturers have to say about this? Did their business get affected?

Here's what Mr Deepak Chandnani, Managing Director of NCR India, a leading manufacturer of ATMs, had to say: "There has been a selective slowdown in ATM deployment due to the changes in the licensing policy. However, several banks have begun deployment again."

What are the concerns that the RBI has had which prompted a licensing policy? The RBI responds that under its Branch Authorisation Policy (including ATMs), announced in September 2005, banks have been given reasonable freedom to rationalise their branch network, and the public interest dimension is kept in mind while giving authorisation.

They also point out that permission for opening 2,054 off-site ATMs have been given since the announcement of the policy in September 2005.

More Stories on : Banking | RBI & Other Central Banks | Information Technology

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