Comments
Indian public sector banks (PSBs) are caught in a piquant situation.
Increasing maintenance cost is forcing them to shut down ATMs, but doing so will only add to their woes as they will consequently incur higher interchange fee. This is because they are the biggest issuers of debit cards and cardholders will now be forced to use other banks’ ATMs.
PSBs, which operate around 65 per cent of the country’s ATMs, have reduced over 5,200 ATMs in the last one year ending November 2018, with more than half of the reduction happening in the last two months.
“High maintenance cost of ATMs is forcing banks to explore alternate delivery channels (ADCs) such as internet banking, business correspondents (BCs) and point of sale (PoS) machines,” said MA Srinivasan, Deputy General Secretary, All India Bank Officers’ Association.
ATM numbers fall
According to RBI data, the number of ATMs operated by PSBs fell from 146,424 in November 2017 to 141,213 in November 2018, while the number of private sector ATMs increased marginally from 59,341 to 60,097 during the comparable period.
“Private banks are making profit because they are acquirers, while all other banks, including SBI, are issuers, and they pay huge intercharge fee to acquiring banks,” said V Balasubramanian, Director, Confederation of ATM Industry (CATMi), the apex body of the domestic ATM industry
Interchange fee is the amount paid by the issuing bank to the acquiring bank when the customer of the issuer bank uses the latter’s ATM.
Currently, interchange fee for every cash transaction is ₹15, and for non-cash transaction it is ₹5.
In November 2018, CATMi had said that 50 per cent of India’s existing ATMs, particularly the ones in non-urban areas, may down shutters by March 2019, due to non-viability of operations.
Among PSBs, Central Bank of India saw the highest reduction of about 1,300 ATMs, followed by Union Bank of India and Bank of India, which witnessed a reduction of about 980 ATMs on a year-on-year basis as on November 2018.
While the number of PSB ATMs is witnessing a declining trend, debit cards of PSBs grew by 13.59 per cent to 781 million (688 million) as on November 2018, against a 9.66 per cent growth of private bank debit cards to 154 million as on November 2018 from 140 million in November 2017.
The number of debit cards issued by SBI, which constitutes 35 per cent of all debit cards, rose to 323 million in November 2018 from 275 million in November 2017, but its ATMs shrank by 970.
“If more number of debit cards are issued, where will the customers use them if there are not adequate number of ATMs to feed them. Banks have to open more ATMs to be acquirer and shut down commercially unviable ones.” said Balasubramanian.
RBI norms
The RBI’s recent guidelines on hardware and software upgrades for ATMs, mandates on cash management standards, cassette-swap method of cash loading, and Home Ministry’s guidelines for safe transport of cash are some of the factors that have increased the cost of ATM maintenance for banks that are already burdened with a huge interchange fee.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.