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To avoid closure of ATMs due to rising compliance costs, the Confederation of ATM Industry (CATMi) has called upon the Reserve Bank of India (RBI) to constitute a task force to transparently discover pricing related to implementing cassette swap for replenishing cash and adhering to minimum standards for cash-management activities.
While the RBI has asked banks to comply with its directives (issued in April 2018) on cash management (engaging cash-in-transit companies/cash replenishment agencies), and using lockable cassettes in ATMs, which will be swapped at the time of cash replenishment, there has been no agreement so far between banks and service providers on how the increased costs can be defrayed via fresh service-level agreements.
According to Himanshu Pujara, Treasurer, CATMi, the RBI, either under its own aegis or under the aegis of the Indian Banks’ Association (IBA), should constitute a task force involving CATMi, banks and CIT (cash-in-transit) agencies to ascertain the actual cost of providing these services.
“We need buy-in of the larger ecosystem. We want a committee/task force to be constituted. It can do proper price discovery of every item of compliance, and the corresponding fair cost that should be assigned to each of those items.
“Let there at least be unanimity across the industry on what these costs will be. Once there is unanimity, then it is more about who bears the cost…So, the key is to establish a baseline in terms of what those costs are,” said Pujara, who is also Managing Director of Euronet Services India Pvt Ltd.
On Wednesday, CATMi warned that almost 50 per cent of the 2.38 lakh ATMs may have to be closed by March 2019 on account of unviability of operations brought about by recent regulatory guidelines for ATM hardware and software upgrades, recent mandates on cash management standards, and the cassette swap method of loading cash.
As per estimates, each ATM will require three sets of five cassettes – one set in the ATM, one in transit, and another at branch/CIT company (ready for loading next day).
The cost of each cassette is about ₹20,000. So, the one-time cost of additional cassettes for over two lakh ATMs could be close to ₹6,000 crore.
Further, to comply with the minimum cash management standards, including the requirement of specially designed and fabricated Light Commercial Vehicles having separate passenger and cash compartments with CCTV covering both compartments, and two armed security guards (gunmen), prescribed by the RBI, the cost per month per ATM will increase by ₹4,000.
“So, effectively, one by one, over the last 12 months, there have been so many of these compliance mandates issued by the RBI, and the government that has taken the industry to a point where it is completely unviable for these service providers to bear these costs.
“...And we have been in conversation with the banks, but there is no resolution in terms of how the commercials will basically be addressed on these issues,” said Pujara.
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