The Reserve Bank of India (RBI) has acquiesced to the plea of stakeholders in the ATM ecosystem to waive penalty in case ATMs cannot be replenished on time due to unforeseen circumstances.

This will bring some relief to the stakeholders -- banks, White Label ATM Operators (WLAOs) and managed service providers (Brown Label ATM operators/ BLAOs) -- who feared they may be slapped with penalties even if cash-outs at ATMs happen due to situations beyond their control.

According to RBI’s August 2021 circular on ‘Monitoring Availability of Cash at ATMs’, a flat penalty of ₹10,000 per ATM would be imposed on an ATM operator if an ATM is cash-out for more than 10 hours in a month. There was no allowance for non-replenishment of ATMs due to unforeseen circumstances.

A senior public sector bank official said had RBI not relented on their plea for waiver of penalty for non-replenishment of ATMs due to circumstances beyond their control, deployment of new ATMs in rural and semi-urban areas would have come to a standstill. Further, stakeholders would have weeded out ATMs which were incurring losses due to the penalties.

While appreciating the intent behind the circular (to not cause inconvenience to members of the public due to cash-outs at ATMs), industry players said the penalty scheme does not seem to have taken into account the available cash service logistics infrastructure that supports ATM services, particularly in rural and semi-urban locations.

Moreover, the 2018 Ministry of Home Affairs (MHA) guidelines governing movement of cash for banks and ATMs prohibit loading of cash after a certain time -- after 6 pm in rural areas; before 9 am or after 4 pm in the districts notified by the Central Government as Left Wing Extremism (LWE) affected areas; and after 9 pm in urban areas.

So, if an ATM goes cash-out in rural areas or in districts affected by LWE, the operator would have faced penalties due to non-replenishment of cash.

Downtime at ATMs in rural and semi-urban areas can occur due to challenges relating to logistics, the very small aperture terminals for data communication not working, the machine developing a snag, and power supply issues, among others.

With the RBI incorporating a provision for waiver of penalty for non-replenishment of ATMs due to unforeseen circumstances in the scheme, ATM operators are expected to expand their networks with renewed vigour.

As at December-end 2021, there were 2.41 lakh ATMs in the country, against 2.33 lakh ATMs as at December-end 2020.

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