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With just a day to go, banks are likely to miss the deadline to implement the Home Ministry’s rules on safe transportation of cash to automated teller machines (ATMs). There seems to be no clarity among the stakeholders as to who will bear the additional cost burden of compliance, which is estimated to run in excess of ₹5,000 crore.
In August last year, the Home Ministry issued the Private Security Agencies Rules (Private Security to Cash Transportation Activities Rules, 2018), enumerating a list of rules to be followed by public and private sector banks and financial service providers that have outsourced handling and transportation of cash and other valuables to private security agencies.
Model rules
The ministry’s model rules include use of specially-designed and fabricated cash vans, live GPS tracking of cash vans, cash-carrying limit of ₹5 crore per trip, and training and certification of security personnel, besides the mandate to deploy a driver, two armed security guards, and two ATM officers or custodian on board each cash van
In April, the RBI, too, issued a similar circular, which prescribed a list of rules on loading cash (cassette-swap method) and terms for engaging service providers and subcontractors to carry out the cash-management activities of banks.
The RBI circular mandated that ATM service providers must have a minimum net worth of ₹100 crore at all times, besides a minimum fleet size of 300 specifically-fabricated cash vans, CCTV and GPS-enabled cash vans with armed security guards, among other requirements.
The guidelines of the Home Ministry and the RBI came at a time when banks, particularly public sector ones, are shutting down ATMs due to high maintenance cost and unviability of operations.
Outsourcing
Some banks are even considering outsourcing their entire ATM operations to cut costs and reduce regulatory pressure. “We are looking at end-to-end outsourcing of our ATM operations to original equipment manufacturers (OEM) by paying them a monthly rent,” said Ramesh Vijayakumar, V-P and Head - Digital Banking, Lakshmi Vilas Bank.
But there are voices of support for the new norms. “With increasing incidents of attacks on cash-carrying vehicles, enhanced safety measures have become highly inevitable and cost cannot be a reason to not comply,” said MA Srinivasan, Deputy General Secretary, All India Bank Officers’ Association (AIBOA), adding, “in case of any loss, even the insurers will not compensate if the elaborate safety guidelines are not followed”.
While an e-mail sent to Indian Banks’ Association (IBA) did not elicit any response, a Chennai-based cash management agency said it is not authorised to speak, as the Cash Logistics Association (CLA) is at an advanced stage of discussion with multiple stakeholders on this matter.
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