Priya Nair

Mumbai, Jan. 1

SEVERAL banks are looking to expand their ATM network by tying up with other banks for sharing ATMs. For banks that have limited number of branches this is an easier and cheaper way to expand their reach.

Customers on the other hand, get access to more number of ATMs.

IndusInd Bank and State Bank of India recently signed a bilateral agreement to share the ATM network. Apart from IndusInd Bank, SBI already has similar bilateral agreements with six others including HDFC Bank, UTI Bank, Punjab National Bank, Corporation Bank, Indian Bank and Andhra Bank.

SBI is in discussion with three more public sector banks for sharing ATMs, said Mr R.N. Ramanathan, Deputy Managing Director, Information Technology.

For smaller banks such as IndusInd, which are still in the expansion mode, tying up with other banks for bilateral or multilateral arrangements to share ATMs is a more convenient and faster way to grow.

Earlier, banks did not need licences for putting up ATMs. They could inform Reserve Bank of India after putting up the ATM. But recent RBI guidelines makes it mandatory for banks to apply for licence for an offsite ATM. Banks also have to inform RBI at the beginning of the year about the number of ATMs they wish to put up.

Mr Bhaskar Ghose, Managing Director, IndusInd Bank, said, "A bank like ours which plans to expand would prefer branches over ATM because it has more advantages. Tying up with other banks is a more cost-effective way for us than setting up our own." IndusInd is planning to tie-up with about six to seven more banks soon for ATM sharing.

According to Mr Aspy Engineer, Vice-President, Retail Banking, UTI Bank, the tie-up with SBI has given it extensive reach in more cities.

"The synergy of the tie-up is that we are present in more numbers in some cities, but SBI is present in more number of cities." For customers the advantage of accessing an SBI ATM is reduced rates as against other Visa ATMs.

UTI Bank, which has over 1,600 ATMs of its own, also plans to tie up with one or two more banks in the near future, he added.

However, Mr Engineer said, "Bilateral agreements have reached an impasse to a certain extent. Going forward there would be more multilateral agreements."

But Mr Ramanathan said the SBI group would consider joining a multilateral network, like National Financial Switch, Cashnet or BANCs, only if more networks come up and it offers value for money.

Currently, the SBI group accounts for 45 per cent of the ATM network in the country with over 8,000 ATMs.

ATM sharing agreements make it possible for smaller banks to offer their customers greater reach and convenience, even as bigger banks develop their own networks, said Mr Rahul Bhagat, Vice-President, HDFC Bank.

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(This article was published in the Business Line print edition dated January 2, 2006)
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