Money & Banking

Who will pay for ATM rejig, post-demonetisation?

| Updated on: Jan 17, 2018
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Recalibration has cost third-party service providers nearly ₹400 crore

ATM service providers lost nearly ₹400 crore between November 2016 and June 2017 due to demonetisation.

There is no clarity on how they are going to be compensated for the loss, said industry sources.

There are a little over two lakh ATMs across the country with majority of them managed by third-party vendors who run them on behalf of banks. These machines come with a fixed number of cassettes — two or four — and each calibrated to hold specific currency.

Prior to demonetisation, one cassette was configured for ₹1,000 notes, two for ₹500 notes, and one for ₹100 notes.

With demonetisation, ₹1,000 and ₹500 notes were pulled out of circulation and the cassettes were recalibrated to dispense the new ₹2,000 and ₹500 notes, and ₹100 notes. The recalibration effort involved banks, ATM manufacturers, and cash management and logistics companies.

Recalibration of ATMs led to additional cost for banks and to ATM service providers. It cost ₹3,000 per ATM to accommodate new currency, sources said. Even as the industry is yet to recover from the loss, the government is now planning to add ₹200 notes that will require the machines to be recalibrated again, they said.

The recalibration for ₹200 notes has been tested successfully. But the service providers are awaiting clarity on compensation from banks to initiate the process, the sources said.

Post demonetisation, there was limited availability of smaller-denomination notes . A larger supply of these notes will increase the number of transactions. This will be beneficial for service providers as they are paid per transaction by banks, the sources added.

Published on January 17, 2018

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