White Label ATM Operators (WLAOs) may be forced to close down many ATMs, which are predominantly deployed in semi-urban and rural (SURU) areas, due to restrictions imposed by the Reserve Bank of India (RBI) on the opening of current accounts.

Financial inclusion

While the intention of RBI’s August 6 circular, ‘Opening of Current Accounts by Banks - Need for Discipline’, is to enforce credit discipline among banks and their borrowers, it could end up hurting WLAOs, who are furthering the cause of financial inclusion by deploying ATMs in the hinterland.

The RBI has restricted the opening of current accounts with any bank other than the lender bank in case the lending facility is more than ₹5 crore.

As per RBI data, there are eight WLAOs, including Tata Communications Payment Solutions, BTI Payments, AGS Transact Technologies, and Hitachi Payment Services, with collective pan-India ATM deployment of about 24,000 as of July-end 2020. ATMs deployed by WLAOs account for about 10 per cent of the total ATMs deployed in the country.

“Today, WLAOs dispense about ₹8,000 crore every month... Significant amount of money is withdrawn by them from current accounts outside the key lenders.

“As of today, we have working capital loans from various banks. There is no restriction on which bank we can borrow money from. So, that will come to a halt...If this comes (circular is implemented from November 6), we are in for serious trouble,” said K Srinivas, MD and CEO, BTI Payments, and spokesperson, Confederation of ATM Industry.

Serious implications

WLAOs are of the view that RBI’s August 6 notification has serious implications for their operations, as many lending banks (private and foreign banks) do not have the capability of providing currency in remote corners of the country, and the banks that have the capability (public sector banks) of providing currency do not seem keen on providing working capital.

Srinivas said: “We have to withdraw cash from various locations across the country. Now, we may have working capital limits from three or four banks. Today, WLAOs go to multiple banks, including RBI currency chests, which are largely run by public sector banks (PSBs), for sourcing and withdrawing cash.

“...And we don’t have a working capital arrangement with SBI... Once this rule (restriction on opening a current account) comes into play then we can’t withdraw money from SBI anymore.” As of June-end 2020, SBI had a vast network of 22,135 branches across the country.

So, WLAOs want the RBI to either grant them an exemption from the August 6 circular or bring in a restriction to the effect that the current accounts opened by them cannot be used for anything else other than for withdrawing cash for filling ATMs, or such accounts cannot be opened without the consent of the existing lenders.