Money & Banking

Paucity of ATMs leaves money in Jan Dhan accounts less accessible

Radhika Merwin BL Research Bureau | Updated on April 10, 2020 Published on April 09, 2020

Representative image   -  The Hindu

Amid lockdown, ATMs often run out of cash; problem is deeper in rural pockets

In a bid to ease the pain of Covid-induced lockdown on poor and low-income households, the government announced a cash transfer of ₹500 per month for the next three months to women holding Jan Dhan accounts. Aside from the fact that the cash transfer will benefit only a little over half of the total Jan Dhan account holders, access to cash is becoming a bigger problem for the poor.

BusinessLine interacted with a few people in villages and in the metros, particularly in the poor and low-income segments, who have been facing hurdles in withdrawing cash from ATMs. Aside from the restriction in movement owing to the lockdown, ATMs running out of cash is also becoming an issue.

“Amid the ongoing lockdown, there are challenges in transporting cash in certain pockets,” said Navroze Dastur, MD, NCR India. “Earlier, ATM service providers were not recognised as ‘essential services’, which impacted transit of cash.”

“With the government now recognising ATM services as essential, issues have eased. We have a large part of our field force operational. However, we do face problems in certain areas. There have also been issues with moving spare parts for ATMs within the States and inter-State due to lack of logistics and transport support,” he added.

The problem is more acute in rural areas. Our interaction last week with residents of Tamil Nadu’s Kundaveli village suggested that withdrawing cash from accounts is becoming a challenging task, with most bank branches shut and no cash in ATMs.

“In rural areas, there are more challenges in ensuring that ATMs are filled with cash all the time,” said Dastur.

Dismal reach

Cash woes in rural India even in normal times persist owing to the lower number of ATMs and hitches in supply of cash to ATMs in these remote areas. The lockdown has obviously made matters worse.

India’s rural areas were the worst hit during demonetisation (November 2016), owing to shortage of cash in ATMs. Ineffective remonetisation had led to the shutdown of many ATMs in rural areas between September 2016 and December 2018. From around 41,633 as of September 2016, the number of ATMs in rural areas fell to 40,807 in the quarter ended December 2018. While the number of ATMs has increased to 45,937 as of December 2019, only about 20 per cent of them are in rural areas.

The reach of private banks in the hinterland is poorer, with just 10 per cent of their ATM machines put up there. Even small finance banks that are intended to help provide last-mile reach in rural areas, have only 17 per cent of their ATMs set up in these areas.

SBI has a little over 11,000 ATMs in rural areas; the second-largest network belongs to Axis Bank but it has a far lower number of ATMs, at 3,277. After the top 10 banks (ending with HDFC Bank having 1,060 ATMs in rural areas), the tally reduces significantly to less than 1,000 ATMs.

White-label ATMs

The RBI has granted licences to non-bank entities to set up white-label ATMs (WLAs), with the aim of expanding the reach of ATMs in semi-urban and rural areas. However, the inability on the part of players to generate ample revenues and expand significantly has limited the number of WLAs in rural areas.

As of December 2019, there were just 10,852 WLAs in rural areas. Also, of the eight players in this market, four — Tata Communications Payment Solutions (3,797) and BTI Payments (2,844), Vakrangee (2,821) and Hitachi Payment (1,192) — alone constitute 98 per cent of the total WLAs.



Published on April 09, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.