Nearly 50 per cent of the total Automated Teller Machines (ATMs) across the country may be forced to shut down by March 2019 due to “unviability” of operations owing to “recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash”.
Handing out a warning to this effect, the Confederation of ATM Industry (CATMi) said on Wednesday that of the current 2,38,000 ATMs, around 1,13,000 ATMs, including 1,00,000 off-site and more than 15,000 white label ATMs, are expected to down shutters.
“The forced closure is on account of unviability of operations brought about by recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash,” CATMi Director V Balasubramanian said.
According to a CATMi statement, a large number of ATMs in non-urban locations may be shut down due to unviability of operations. “If this happens, the financial inclusion programme would be severely impacted as millions of beneficiaries under the Government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, who withdraw subsidies in form of cash through ATMs, may find their neighbourhood ATM shut,” the CATMi spokesperson said.
The CATMi has predicted the closure of ATMs may result in long queues and chaos at ATMs. “Several hundred thousand jobs ride on this industry and as per CATMi estimates, the closure of ATMs may result in considerable job losses that would be detrimental to financial services in the economy,” the ATM industry body said.
“Our members, who include the ATM managed service providers (MSPs), brown-label ATM deployers (BLAs) and White Label ATM Operators (WLAOs), are already reeling under the financial impact caused by huge losses during and post demonetisation as cash supply was impacted and remained inconsistent for months,” Balasubramanian said.
He said the situation had further deteriorated now due to the additional compliance requirements that call for a huge cost outlay. “The service providers do not have the financial means to meet such massive costs and may be forced to shut down these ATMs, unless banks step in to bear the load of the additional cost of compliances. Revenues from providing ATMs as a service are not growing at all due to very low ATM interchange and ever-increasing costs”.
The CATMi, which is a registered non-profit trade association formed by ATM industry leaders to foster the growth of the industry, estimates an additional outlay of about Rs 3,500 crore - only for complying with the new cash logistics and cassette swap method. These compliance costs may also see the 15,000-plus white label ATMs going out of business.
“The ATM industry in India has reached a tipping point, and unless ATM deployers are compensated by banks for making these investments, there is likely to be a scenario where contracts are surrendered, leading to large-scale closure of ATMs,” Balasubramanian added.