The tardy progress made by banks in complying with the extended timeline for implementation of cassette swap in ATMs has drawn the ire of the Reserve Bank of India.
The central bank had extended the timeline for implementation of cassette swap in all ATMs to March 31, 2022, from March 31, 2021, following the Indian Banks’ Association (IBA) making a representation on behalf of various banks, which expressed difficulties in meeting the deadline.
Many banks are likely to miss the extended deadline for implementing cassette swap in ATMs, say bankers.
Banks have cited various constraints, including availability of adequate number of cassettes, readiness of cash replenishment agencies to deal with cassette swap and costs, for the slow progress.
At a recent meeting with banks, regulatory officials raised the issue of lacklustre progress in implementing cassette swap, despite being given a one-year breather, said a senior public bank executive.
According to AGS Transact Technologies’ January 2022 Red Herring Prospectus, as of August 2021, only one per cent of ATMs have implemented the cassette swap feature in their ATM, and it is anticipated that only 50 per cent of the ATMs will be upgraded to cassette swap by the end of financial year 2022
As per estimates, each ATM will require three sets of five cassettes — one set in the ATM, one in transit and another at branch/ cash-in-transit (CIT) company (ready for loading next day).
The cost of each cassette is in the range of ₹15,000 to ₹20,000. As of December-end 2021, there were 2.41 lakh ATMs in the country. Of these, 2.11 lakh were bank-owned ATMs and 30,000 were owned by White Label ATM Operators.
Based on the recommendations of the Committee on Currency Movement (CCM), the RBI, in April 2018, had advised that banks may consider using lockable cassettes in their ATMs, which will be swapped at the time of cash replenishment. This is aimed at mitigating risks involved in open cash replenishment/ top-up.
The central bank then said cassette swap in ATMs may be implemented in a phased manner, covering at least one-third of the ATMs operated by banks every year, such that all ATMs achieve cassette swap by March 31, 2021.
Bankers are of the view that on-site ATMs should be exempt from the requirement of cassette swap as banks’ branch staff are responsible for their replenishment.
Of the 2.11 lakh bank-owned ATMs, 54 per cent are on-site while remaining are off-site.