RBI issues draft norms on White Label ATMs owned by non-banks

The draft guidelines said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorisation under the Payment and Settlement Systems Act, 2007. Non-bank entities proposing to set up such service will have to have a minimum net worth of Rs100 crore, the RBI added

Mumbai: In a bid to accelerate the growth and wider spread of ATMs, the Reserve Bank of India (RBI) on Tuesday issued draft guidelines for permitting non-banking entities to set up, own and operate such money dispensing machines, reports PTI.

Non-bank entities proposing to set up such service will have to have a minimum net worth of Rs100 crore, RBI said.

“The RBI has sought views/comments on the draft circular from banks, authorised ATM network operators, non-bank entities and members of public,” it said, adding that the stakeholders can make suggestions by 6th March.

The central bank said that it has reviewed the extant policy on ATMs.

“... it has been decided to permit non-banks to set up, own and operate ATMs to accelerate the growth and penetration of ATMs in the country. Such ATMs will be in the nature of White Label ATMs (WLA) and would provide ATM services to customers of all banks,” the draft guidelines said.

The banking sector has seen considerable growth in ATMS in recent years with around 87,000 machines operational across the country. However, they are largely restricted to the urban and metro areas.

“Although there has been about 30% year-on-year growth in the number of ATMs deployed in the country since 2008, ATM penetration on a per capita basis continues to be less compared to other countries.

“There is, therefore, an abundant scope and a felt need to deploy more ATMs, particularly in Tier III to VI areas of the country,” the apex bank said.

The draft guidelines said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorisation under the Payment and Settlement Systems Act, 2007.

It suggested that only the cards issued by banks would be permitted to be used at the WLAs initially and acceptance of deposits shall not be permitted.

“The WLA operator will be the ‘acquirer’ for all transactions at the WLA and earn his fee accordingly,” it said.

The WLA operator would be permitted to earn extra revenue through advertisement and by offering value-added services.

“The advertisements placed on such ATMs would be subject to Advertising Standards Council of India (ASCI) codes and other regulations,” the RBI draft proposed.

It also added: “Being non-bank owned ATMs, the guidelines on five free transactions in a month for using other bank ATMs would not be applicable for transactions effected on the WLAs.

The charges for the transactions should be displayed on the screen before the customer initiates the transaction.”

As per the draft guidelines, the WLA operator would not be entitled to any other fee from issuer bank other than the ‘Interchange’ fee payable to acquirer bank under the present bank owned ATM scenario.

“The WLA operator shall also not be permitted to charge any fee from the customers for the use of the ATM resources,” it said, further suggesting that regulatory guidelines relating to compensation for failed ATM transactions would apply to transactions at WLAs.

“General guidelines governing the operations of the bank operated ATMs would apply mutatis mutandis to WLAs,” the draft guidelines said.

The operator will have one ‘sponsor bank’ which will serve as the settlement bank for of all the transactions at the WLAs.

Settlement of all the transactions at the ATMs shall be done only in the books of the sponsor bank through the ATM network with whom the operator has established connectivity.

The maintenance and servicing of the WLAs shall be the sole responsibility of the operator. The sponsor bank would be responsible for cash management at the WLAs.

“For the purpose of cash management, the sponsor bank may enter into tie-ups with other banks for loading and reconciliation of cash at various WLAs at locations where it has no presence,” the draft guidelines proposed.

While the primary responsibility to redress grievance of customers relating to failed ATM transactions will vest with the issuing bank, the sponsor bank will have to provide necessary support in this regard, including making available relevant records and information, it added.

White-level ATMs are not owned by banks but by private ATM service providers. Customers from any bank can deposit or withdraw money from such ATMs.

Besides increasing banking services, it will help sponsored banks to set up ATMs without incurring capital expenses for owning money dispensing machine.

At present, brown label ATMs are allowed in the country.

In such cases, the hardware as well as lease is under the ownership of the service provider, while connectivity and cash handling and management is the responsibility of the sponsor bank.

User

Rate rise cycle at its peak: RBI deputy governor

RBI deputy governor Subir Gokarn, who is in charge of monetary policy at Mint Road, added that in RBI’s view, inflation is “trending down from the highs of 9% plus to something closer to 7%”

Mumbai: Stating that the January headline inflation at 6.55% is in line with its expectations, Reserve Bank of India (RBI) deputy governor Subir Gokarn on Tuesday said the data underline that the rate hike cycle is at its peak, reports PTI.

“It (headline inflation) is in our trajectory... till it matches our projection, it reinforces our belief that rate cycle has peaked,” Mr Gokarn told reporters on the sidelines of an event here.

Mr Gokarn, who is in charge of monetary policy at Mint Road, added that in RBI’s view, inflation is “trending down from the highs of 9% plus to something closer to 7%.” 

The data released on Tuesday said overall inflation has fallen to the 26-month low of 6.55%, courtesy a deflation in the food basket.

The apex bank, which ushered in a series of 13 consecutive hikes over a 19-month period till December last year to tame the uncomfortably high inflation, has put a year-end target of headline inflation at 6%.

However, in its monetary policy announcement on 24th January—where it cut the cash reserve ratio but kept its overnight lending rate unchanged—the RBI articulated a shift in focus from inflation to growth in its monetary stance.

Mr Gokarn flagged jump in oil prices and the possibility of food inflation going back into positive territory as the future potential difficulties.

The non-food manufacturing inflation, which stood at 6.49% year-on-year, is also broadly in line with RBI projection, Mr Gokarn said.

In its last policy review, the RBI had cut CRR or the percentage of deposits banks have to park with RBI, by 0.50% due to pressure on liquidity while analysts are expecting it to cut its policy rate at March or April review.

When asked about the possibility of another CRR cut as the liquidity continues to be beyond the comfort zone with banks drawing almost Rs1 lakh crore through the overnight window, Mr Gokarn evaded direct reply.

In the backdrop of RBI pitching for concrete steps to carry out fiscal consolidation, Mr Gokarn said the Union Budget was an opportunity to bring a change.

“Typically, populist steps, if any, are taken in the last budget. This year and next year provide opportunity for fiscal consolidation,” he said.

When asked about growing concerns about asset quality among lenders, Mr Gokarn attributed the jump to sectoral issues, migration of NPA calculation to system-based approach and macroeconomic weaknesses.

He said the issues regarding asset quality will be addressed at the bankers’ meeting with his colleague deputy governor KC Chakrabarty scheduled for later this month.

User

Timely action saved illegal transfer of Rs66k crore: FM

“The Directorate of Transfer Pricing in the ministry of finance helped in saving Rs66,085 crore during the last year by timely stopping the illegal transfer of money through transfer pricing,” finance minister Pranab Mukherjee said at the meeting of Central Direct Taxes Advisory Committee

New Delhi: Finance minister Pranab Mukherjee on Tuesday said timely action by the revenue authorities prevented illegal transfer of Rs66,085 crore by multinational companies in 2010-11, reports PTI.

“The Directorate of Transfer Pricing in the ministry (of finance) helped in saving Rs66,085 crore during the last year by timely stopping the illegal transfer of money through transfer pricing,” he said at the meeting of Central Direct Taxes Advisory Committee (CDTAC) here.

Multinational companies use transfer pricing for products and services in cross-border trade between their related entities to shift profits to countries with low tax rates. In the process, countries lose tax revenue.

Mr Mukherjee said the government has taken several steps to unearth black money and legislative measures to obtain banking information—through Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs)—are being negotiated. As many as 25 tax treaties have been concluded for improved exchange of information.

He told CDTAC members, representing different fields, about the government’s intent to develop and inculcate a tax structure which would encourage people to voluntarily pay taxes, while tax administration acts as a facilitator.

“Initiative of the government is to provide citizen centric governance in order to improve taxpayer services and redressal of public grievances,” Mr Mukherjee said.

Members suggested extension of deduction for investment in the infrastructure bonds for at least one more year and increasing the limit under it to Rs50,000, from Rs20,000 at present, an official statement said.

Members also suggested steps to curb black money in real estate transactions, provide relief to the salaried tax payers by retaining the standard deduction under Section 16 of the Act for a sum of Rs50,000 and extending the benefit of nil TDS to NBFCs.

CBDT chairman Laxman Das said the department is setting  up another Central Processing Centre at Ghaziabad to process TDS returns and it will result in reduction of TDS mismatches during the processing of tax returns.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)