The Department of Posts (DoP) has decided to handover operations of its pan-India network of 1,000 onsite ATMs to its arm, India Post Payments Bank (IPPB).

IPPB, in turn, plans to engage the services of a managed service provider (Brown Label ATM operator/BLAO) to manage these ATMs on an operational expenditure (opex) model.

The move by IPPB to hire a managed service provider comes at a time when the Reserve Bank of India (RBI) and the Ministry of Home Affairs (MHA) have tightened the norms relating to the ATM ecosystem.

RBI norms include implementation of cassette swap for replenishing ATMs and introduction of a scheme of penalty for downtime at ATMs due to cash-outs.

Further, MHA had issued guidelines in 2018, prescribing cut-off time, after which no cash loading of the ATMs or cash transportation activities can be done in urban and rural areas and left-wing extremism affected areas.


IPPB expects the managed service provider to replace all the existing ATMs of DoP (India Post) with new ATMs on opex model.

The service provider will also be responsible for the ATMs’ upgrade, maintenance, cash management, customer complaints redressal and online monitoring, among others.

These ATMs will be integrated with the bank’s existing infrastructure seamlessly. IPPB will be sponsor bank and DoP will be a sub member for ATM operations.

Under the opex model, transaction revenue will be with IPPB and the managed service provider will be paid a fixed monthly amount for each ATM machine and support infrastructure such as AC, UPS, etc.

As per the Reserve Bank of India’s Committee to Review the ATM Interchange Fee Structure (2020), the average monthly cost of operating ATMs in the case of managed service providers, who deploy and operate ATMs for banks, is about ₹70,565 per ATM pre-compliance and would be about ₹83,700 per ATM after complying with recent ATM security guidelines and control measures, MHA guidelines and cassette swap requirements.

The aforementioned cost does not include cost of cash (holding) as it is borne by banks in BLAO model, the six-member Committee headed by VG Kannan, then Chief Executive of the Indian Banks’ Association, said.

The States where DoP has more than 50 ATMs include Tamil Nadu (97; the Department’s first ATM was inaugurated at Thyagaraya Nagar Head Post Office in Chennai in 2014); followed by Uttar Pradesh (89); Karnataka (76); Maharashtra (75); West Bengal (65); Rajasthan (64); Andhra Pradesh (59), and Kerala and Madhya Pradesh (52 each).

IPPB was set up by the government as a public limited company under India Post in 2016 to remove barriers to access basic financial services by the common man especially in the unbanked and under-banked areas.