Half of India’s ATM to shut down by March 2019

November 22: In a shocking revelation, service providers may be forced to close down almost 1.13 lakh Automated Teller Machines (ATM)s across the country by March 2019, according to the Confederation of ATM Industry (CATMi). Currently, the country has approximately 2.38 lakh installed ATMs, as per the latest publicly available figures. This may result in long queues and chaos similar to what the country witnessed when ATMs were not dispensing cash, post demonetisation.

CATMi also said that its members, including 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 demonetization as cash supply was impacted and remained inconsistent for months. “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 said.

CATMi Director V Balasubramanian said that they are forced on account of recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash, entailing huge investments by the industry. Mr Balasubramanian said to implement the Cassette Swap alone would need an additional outlay of Rs. 3,500 crore for CATMi.

In April this year, the Reserve Bank of India (RBI) imposed stringent guidelines for ATMs service providers or their contractors. These include a minimum net worth requirement of Rs. 100 crore, minimum fleet size of 300 fully-equipped cash vans, two custodians and two armed guards plus a driver, GPS-CCTV, and later in June came the diktat for upgradation of the software from WindowXP to Window10. “To implement all these security, software-hardware directive would entail an additional cost of minimum Rs. 150,000 per ATM per month. This works out to astronomical figures for all the 238,000 ATMs in the country,” Mr Balasubramanian pointed out.

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 compliance. 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, CATMi added.

If the government does not step in immediately to resolve the impending crisis, then the much hyped slogan of ‘digital India’ may get lost in the darkness of oblivion.