The Reserve Bank of India is exploring the option of increasing the licence period for white label ATM providers to five years from one year.
This has been prompted by the feedback from companies that have secured an in-principal approval to set up these ATMs, a senior RBI official said. A white label ATM will serve the customers of all banks for the same fee.
Today, the RBI had convened a meeting in Mumbai with officials of companies that were granted approval to set up the ATMs. Representatives from Tata Communications, SREI Infrastructure Finance, Vakrangee Software, Prizm Payments and AGS Transact were among those present.
“We had called the operators to discuss their issues. The RBI may look into their demands for increasing the tenure of their licence,” the RBI official said on the condition of anonymity.
Many company representatives have been requesting the RBI to extend the validity of the licences, two sources who were present at the meeting told Business Line . Under the RBI guidelines, the authorisation for setting up a WLA operation would be initially valid for a period of one year.
“One year is too less a time for companies to settle in and earn revenue. This will be especially detrimental for players who do not have presence in rural areas.
“They will take more than a year to identify the correct locations and roll out the infrastructure,” said one of the company officials.
Another player said that no company will take the risk of bringing in equity and debt for the venture as a one-year play will be ‘too risky’ to invest in.
As per the RBI guidelines, the white label ATM providers can pick up one of three schemes (A, B and C) depending on the rural to semi-urban ratio of ATMs proposed.
‘Scheme A’ preferred
Most operators have asked for ‘Scheme A’ which favours opening ATMs in rural areas, as per the guidelines laid out by the RBI. WLA operators are allowed to charge their customers as per the banks’ charges.
It may be noted that currently banks are not permitted to charge customers for the first five withdrawal transactions from another bank’s ATM. Above that, banks levy a fee of Rs 15 for cash withdrawal and Rs 5 for balance enquiry.