50% of existing ATMs may down shutters by March 2019 Due to Unviability of Operations: CATMi
Service providers may be forced to close down almost 1.13 lakh ATMs across the country by March 2019, due to unviability of operations, warns, Confederation of ATM Industry (CATMi), the apex body of the domestic ATM industry. These numbers include about one lakh off-site ATMs and a little over 15,000 white label ATMs. Currently, the country has around 2,38,000 installed ATMs, as per the latest publicly available figures. 
 
CATMi said the forced closure is due to 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 estimates an additional outlay of about Rs3,500 crore – only for complying with the new cash logistics and cassette swap method.
 
CATMi said that its members, which 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. 
 
“The situation has 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,” it added.
 
According to CATMi, revenues from providing ATMs as a service are not growing at all due to very low ATM interchange and ever-increasing costs. It says, “These requirements were never anticipated by the industry participants at the time of signing contracts with the banks. Many of these agreements were inked four to five years ago when no such requirements were in sight.”
 
These compliance costs may also see the 15,000-plus white label ATMs going out of business, the apex body of ATM operators says, adding WLA operators already have huge accumulated losses and are in no position to bear additional costs. ATM interchange, the only source of revenue for WLAOs, has remained static despite frantic pleas to increase the rates, it says.
 
CATMi, says, “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.”
 
“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 neighborhood ATM shut. This may result in long queues and chaos similar to what the country witnessed when ATMs were not dispensing cash, post demonetization,” it added.
 
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 as a whole.
 
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    COMMENTS

    Mahesh S Bhatt

    2 years ago

    Foolish Western Models of automations without Business and Without logic Let Sanity prevail Mahesh Bhatt

    ramchandran vishwanathan

    2 years ago

    The Telecom industry is loosing jobs @ 3000 per month . Its high time our PM gets his act together & refurbish the finance ministry which is responsible for this mess

    ICICI Bank Issues Code of Commitment to Customers
    In a major, pro-consumer move after Sandeep Bakshi took over as the CEO and Managing Director of ICICI Bank, it gone ahead and send its code of commitment to customers — not only for retail customers but also for small, medium and micro enterprises. It may be recalled that this code, was proposed during the tenure of Raghuram Rajan as governor of the Reserve Bank of India (RBI). However, the RBI made no effort to get banks to commit to the code. Moneylife Foundation has repeatedly asked the RBI, during Dr Rajan’s tenure to make the consumer charter  more than just a motherhood statement.
     
    In this context, ICICI Bank’s decision to publish the code and publicly agree to adhere to it is a big move forward and its commitment to this will be eagerly watched in the coming months.  
     
    Here is what ICICI Bank has sent out to customers. 
     
    It says: 
     
    We, at ICICI Bank, endeavour to adopt higher standards of banking practices to extend better customer service and achieve higher levels of customer satisfaction.
     
    The Bank is a member of the Banking Codes and Standards Board of India (BCSBI). As a member, we have formulated and adopted a Code of Commitment to Customers, in line with the guidelines provided by BCSBI: 
     
    • Code of Bank’s Commitment to Customers 
    • Code of Bank’s Commitment to Micro, Small and Medium Enterprises (“MSME”)
     
    The Code applies to all the products and services offered by our bank or by agents acting on our behalf, whether provided across the counter, over the phone, by post, through interactive electronic devices, online or by any other method.”
     
    The code has been published in various Indian languages and can be accessed here: https://www.icicibank.com/code-of-commitment.page
     
    The code is essentially the five-point charter of rights that the RBI has formulated:
     
    Right to Fair Treatment: Promote safe and fair customer dealing for banking in a digitised environment and good and fair banking practices by setting minimum standards in our dealings with you. Both the customer and the financial services provider have a right to be treated 
    with courtesy. The customer should not be unfairly discriminated against on grounds such as gender, age, religion, caste and physical ability when offering and delivering financial products.
     
    Right to Transparency, Fair and Honest Dealing: Increase transparency so that you can have a better understanding of what you can reasonably expect from us. The financial services provider should make every effort to ensure that the contracts or agreements it frames are transparent, easily understood by and well communicated to, the common person. The product’s price, the associated risks, the terms and conditions that govern use over the product’s life cycle and the responsibilities of the customer and financial service provider, should be clearly disclosed. The customer should not be subject to unfair business or marketing practices, coercive contractual terms or misleading representations. Over the course of their relationship, the financial services provider cannot threaten the customer with physical harm, exert undue influence, or engage in blatant harassment.
     
    Right to Suitability: The products offered will be appropriate to your needs. The products offered should be appropriate to the needs of the customer and based on an assessment of the customer’s financial circumstances and understanding.
     
    Right to Privacy: Your personal information shall be kept confidential unless you have offered specific consent to the bank or such information is required to be provided under the law or it is provided for a mandated business purpose. Customers’ personal information should be kept confidential unless they have offered specific consent to the financial services provider or such information is required to be provided under the law or it is provided for a mandated business purpose (for example, to credit information companies). The customer should be informed upfront about likely mandated business purposes. Customers have the right to protection from all kinds of communications, electronic or otherwise, which infringe upon their privacy.
     
    Right to Grievance Redressal: Increase awareness of our customers and enhance customer protection and grievance redressal mechanism. The customer has a right to hold the financial services provider accountable for the products offered and to have a clear and easy way to have any valid grievances redressed. The provider should also facilitate redress of grievances stemming from its sale of third party products. The financial services provider must communicate its policy for compensating mistakes, lapses in conduct, as well as non-performance or delays in performance, whether caused by the provider or otherwise. The policy must lay out the rights and duties of the customer when such events occur.
     
    ICICI Bank says it will acknowledge all formal complaints, including complaints filed through electronic means, within three working days and work to resolve it within 30 days. 
     
    More interestingly, the bank has also provided specific links to its policies on redressal, customer rights, compensation, deposits, lockers as well as the model code for direct selling agents.
     
    According to ICICI Bank, its grievance redressal policy is also applicable for grievances relating to services provided by outsourced agencies as well
     
     
     
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    COMMENTS

    B. KRISHNAN

    2 years ago

    I too have not received any such e mail from the Bank, although I am a customer and having regular dealings till today.

    REPLY

    Balaraman Sriram

    In Reply to B. KRISHNAN 2 years ago

    but i get a tonne of marketing spam from the bank as well as its associated entities like idirect

    Ralph Rau

    2 years ago

    What do his past corporate team mates say ? Is Mr Bakshi known to say what he means and mean what he says or is this just "jhumla" - cheap talk ?

    Is it enough to restore credibility to the much weakened adventurous bank brand post the 2008 crisis. (ICICI shares last soared well ahead of HDFC in Dec-Jan 2007-08)

    Can ICICI be more like HDFC than HDFC itself ? Can the DNA change with a CEO change ?

    Will HDFC still retain its aura after the anticipated departure of Mr. Puri the forever MD of who magically delivered consistent 20% plus eps growth for over 2 decades

    As they say...time will tell.

    Balaraman Sriram

    2 years ago

    well as an ICICI Bank customer, I never got any such email or update. reading about it only here.

    RBI Board Decides to Set Up Panel to Review Amount in Reserve, Handing Over Balance to Govt
    The board of Reserve Bank of India (RBI) has decided to form an expert committee to examine the economic capital framework (ECF) of the central bank, which will decide the amount of reserves it can maintain, handing over the balance to the government.
     
    "The Board decided to constitute an expert committee to examine the ECF, the membership and terms of reference of which will be jointly determined by the Government of India and the RBI," the central bank said in a release.
     
    The board also considered other issues related to the liquidity crunch in the economy and relaxation, prompt corrective action (PCA) norms to clean up balance sheet of banks burdened with bad loans will be looked into by RBI's Board for Financial Supervision (BFS).
     
    Eleven of the 21 state-run banks are under the PCA framework. The non-performing assets (NPAs), or bad loans, accumulated in the Indian banking system have touched a staggering Rs10 lakh crore.
     
    The RBI had been at loggerheads with the government over three demands: transfer a higher portion of its reserves to the Centre to keep the fiscal deficit in control; inject more liquidity into the system to stave off a possible blowout among housing and finance companies; and relax the norms for PCA and income recognition of banks.
     
    The differences between the government and the central bank came out in the open after RBI deputy governor Viral Acharya spoke about the consequences of messing around with the central bank's independence while delivering the AD Shroff Memorial lecture in Mumbai on 26th October.
     
    Dr Acharya had said, “Governments that do not respect central bank independence will sooner or later incur the wrath of the financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution.”
     
    Since then, the government has been openly critical about the RBI and was apparently prepared to use its powers under Section 7 of the RBI Act to issue directives to the central bank. However, during the board meeting, members have decided to refer this to the expert committee.
     
    According to CARE Ratings, the issue is important, as there has been a strong case made to transfer the surplus reserves of the RBI to the government as the present level is higher than global standards. "These reserves would presumably be used by the government for the welfare of the people. The argument on the other side is that these reserves are notional and required for contingencies. The committee will have to decide on how much of such reserves would have to be maintained and the purposes for which they should be used. Also the effect on forex reserves and money in circulation will have to be worked out when such a decision is taken," it says.  
     
    These decisions were taken following a crucial board meeting in Mumbai that lasted over nine hours to discuss the liquidity crisis that initially triggered a tiff between the government and the central bank last month.
     
    "The Reserve Bank of India's Central Board met today in Mumbai and discussed the Basel regulatory capital framework, a restructuring scheme for stressed MSMEs (micro small and medium enterprises), bank health under the PCA framework and the Economic Capital Framework (ECF) of RBI," a central bank statement said.
     
    The government has been wanting the RBI to transfer more money to it from its reserves. However, the RBI feels it needs to have a stronger balance sheet to deal with any potential crisis and external shocks.
     
    The meeting had been called amid growing tensions between the Centre and the RBI after the Finance Ministry recently sought discussions under the never-used-before Section 7 of the RBI Act, which empowers the government to issue directions to the RBI Governor.
     
    "The Board also advised that the RBI should consider a scheme for restructuring of stressed standard assets of MSME borrowers with aggregate credit facilities of up to Rs250 million (Rs25 crore), subject to such conditions as are necessary for ensuring financial stability," it added.
     
    This, CARE Ratings feel will be a positive for the SME sector which is facing various challenges. It says, "The RBI will have to work out the guidelines and ensure that banks go about this process in a prudent manner. The restructuring exercise for large loans in the past had led to the creation of the NPA pile which is still to be resolved. Therefore this exercise should be undertaken with the necessary safeguards."
     
    Though, the board decided to retain commercial banks' capital adequacy ratio at 9%, it agreed to extend the period for implementing the last tranche by one year.
     
    "The Board, while deciding to retain the capital to risk weighted assets ratio (CRAR) at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the Capital Conservation Buffer (CCB), by one year, that is, up to 31 March 2020," RBI said.
     
    On the CRAR issue, the government maintains that the capital norm for Indian banks at 9% are much higher than that prevailing for banks overseas.
     
    "The approach taken to these banks will be interesting as presently the framework does put restraints on the operations of these banks. It can be conjectured that any relaxation will be linked to performance so that the banks are able to come out of this framework in a seamless manner. It would also be necessary for the government to follow up and provide capital to these banks as their net worth is low and under pressure from higher provisioning for NPAs," the ratings agency says.
     
    The RBI's central board currently has 18 members, including Governor Urjit Patel and his four deputies as full-time official directors, while the rest have been nominated by the government, including the secretaries from the economic affairs and financial services department.
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    COMMENTS

    Govinda Warrier

    2 years ago

    Let's hope the committee on "Economic Capital for RBI" will get in its TOR included issues like enhancing RBI's Share Capital from the present level of ₹5 crore to a decent acceptable level (say something upwards of $100 billion) and the sources for GOI to fund shortfall in reserves, if and when it happens.

    B. Yerram Raju

    2 years ago

    For some more time to come, Viral Acharya would be seen in quotes of all articles on banking! Second, infusing capital by the government would mean that you and I pay for it. For what? For buttressing the chronic defaulters and crony capitalists milking the banks merry. Third, all the debates and Board room deliberations have no indications that the governance and managements would be cleaned up. Fourth, the beleaguered banking sector has not been put on challenges that there will be clear vision and goals for the next five years on transparency, accountability, autonomy. It is not just reduction of NPAs but rebuilding trust in the banking system that is important today. Is capital going to address the issue? Luckily as the figures speak, banks after backing out from the sale of third party products, are slowly gaining traction on deposits. It is the rise in deposits that speak of the confidence and this would also be speeded up with better customer service. Market segmentation for attracting deposits and delivering services differentially would retrieve the banks from the lost track. Banks internally should focus on training their manpower from bottom to top ' Back to Banking' programs. Government on its part would do well to lay down the policy clearly for the PSBs in particular and rest of the banking sector in general after consultations with the RBI. It should not waste its efforts on mergers of weak banks with strong ones any further and if it can unwind the recent merger it would unleash new energies. Emotional solutions are not the answer to the current problems of the banks.

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