Banks and ATM operators are hopeful that the Reserve Bank of India (RBI) will soon review the penalty on ATMs that have run out of cash but many are on a wait-and-watch mode on the expansion of their ATM networks.

“With the penalty in place, it makes more sense to have ATMs on-site along with bank branches than to keep them off-site. This would ensure that the ATMs can be serviced easily and frequently,” noted a senior bank executive.

“We are hopeful that there will be some relief. Otherwise, the penalty could also impact expansion into semi-urban and rural areas as there are often logistical challenges in loading cash,” noted another banker.

The RBI had in August this year announced the scheme of penalty for non-replenishment of ATMs under which ATMs with no cash for more than ten hours in a month will attract a flat penalty of ₹10,000 each. The scheme has come into effect from October 1, 2021.

Scaling down

“The penalty may impact the deployment of ATMs in rural and remote locations. Withdrawals would become difficult in such a scenario, especially when there is a focus on financial inclusion,” said Radha Rama Dorai, Secretary, Confederation of ATM Industry (CATMi).

CATMi had recently also made a representation to the RBI pointing out that while it is supportive of the move that would help customers, the ATM industry is already under tremendous pressure due to Covid, will have no option but to scale down dramatically.

It estimates that about 70 to 80 per cent of semi-urban and rural ATMs and 20 to 30 per cent of urban ATMs will be liable for the penalty. The likely penalty on operators will be around ₹80-100 crore per month, it had said.

“We hope to get a positive response from the RBI on our representation,” said Dorai.

RBI Deputy Governor T Rabi Sankar had on October 8 also said the RBI is reviewing this penalty scheme after getting feedback from lenders.

“We have received various feedback — some positive and some raising concerns. There are issues specific to locations. We are trying to take all the feedback and have a review and see how best it can be implemented,” he had told reporters.

There are about 2.13 lakh ATMs in the country as of September 30, 2021, of which 1.15 lakh are on-site and the balance 97,383 are off-site.

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