Remember the long queues at bank branches and spending hours to do a simple transaction such as cash withdrawal?

Most of you may not, because the advent of ATMs changed that trend a long time ago, providing customers access to money any time. But after the Centre announced the demonetisation scheme a fortnight ago, people in cities and metros were seen queueing up outside ATMs to do a simple cash withdrawal. And this, when over 80 per cent of the 2.15 lakh ATMs as of June 2016 are in metro, urban and semi-urban areas.

With only 40,000-odd ATMs available in rural areas, access to money in the remotest parts of the country posed a greater challenge. While public sector banks operate only about 20 per cent of their ATMs in rural areas, the reach of private banks in the hinterland is far poorer with just 8 per cent of their ATMs in these areas.

According to data put out by the RBI, State Bank of India has the highest number of ATMs in the country operating 49,669 ATMs as of June 2016, followed by ICICI Bank, Axis, HDFC Bank, Canara Bank and Bank of Baroda.

Bunched up All the top banks have over three-fourth of their ATMs in urban, metro and semi-urban areas. There are a few banks such as UCO Bank, United Bank, Punjab and Sind Bank that have a higher — 34-38 per cent of their branches in rural areas. But given that ATMs of these banks are fewer in number (less than one to one per cent of the total number of ATMs), it does not help in better reach.

SBI has a little under 8,000 ATMs in rural areas; the second largest network belongs to Punjab National Bank with a far lower number of around 2,700. The count reduces significantly to less than 1,000 ATMs after the top 10 banks.

The National Payments Corporation of India (NPCI) puts out a more granular data covering all members of the National Financial Switch — the largest network of ATMs in India. This includes 99 direct member banks, 587 sub-member banks, 56 Regional Rural Banks (RRB) Banks and eight white label ATM providers as of October 2016.

The weak penetration of ATMs across the country is starker in the figures put out by the NPCI. As of October 2016, there are 2.3 lakh ATMs across the country.

Of this about 92 per cent are operated by direct member banks. Sub- member banks and RRBs put together have only about 3,700 ATMs. The rest are white-label ATMs.

One of the initiatives that the RBI took a couple of years back, was to grant licences to non-bank entities to set up white-label ATMs (WLAs) in the country. The main objective of this was to expand reach of ATMs in semi-urban and rural areas, where banks were not able to put up ATMs. Under the RBI’s guidelines, a minimum number of WLAs have to be installed in Tier-III to -VI centres, depending on the scheme opted by each player.

White-label ATMs

Hence almost 41 per cent of WLAs operate in rural areas. However since the total number of WLAs itself is significantly smaller than bank-operated ATMs, access to money still remains a challenge. As of October 2016, there were just 14,427 white label ATMs. Of the 8 players in this market, two players — Tata Communications Payment Solutions (8, 941) and BTI Payments (4, 087) — alone constitute 90 per cent of total white label ATMs. The number of ATMs set up by rest of the players, are far lower in the tally.

With the number of transactions failing to scale up in these remote areas, WLA operators have found it difficult to generate revenues and hence expand further.