What’s Up with ATM Growth?

Sucheta Dalal 25 December 2017

Economy & Nation

The number of ATMs (automated teller machines), which were growing at a compounded rate of 16.4%, over the past four years, has actually gone down. The reduction is a tiny 358 ATMs but it is hugely significant and may spell tough times for bank customers. The Times of India attributes the fall to a “proof of Indians going off cash” and The Economic Times (ET) tells us that this is the earliest sign of a fall in popularity of ATMs. The queues outside ATMs even in Mumbai, contradict both the assumptions.

Shrinkage of ATMs can probably be explained by three factors. One, demonetisation forced many ATMs to remain shut for months; so expansion was unnecessary. Secondly, in the past two years, banks have been charging for ATM transactions beyond three or four free ones every month which may have led to people limiting their usage. Thirdly, ATMs that used to be needlessly clustered at busy commercial hubs are probably being rationalised.

ATMs of foreign banks dropped from 1,141 to 934 over the past three years, including those of banks that have shut their retail network. State Bank of India has shut down some ATMs after the merger of associate banks. A few others have said that high cost of rentals and maintenance (security and electricity) is forcing them to rethink their ATM policy. The fear is that, in the absence of coordination among banks, customers may be forced into more expensive digital transactions, or to keep more cash with them. This is especially true of non-metro cities where there are plenty of complaints about ATMs not functioning. In 2015, Moneylife Foundation had developed an app, which was presented to the Reserve Bank of India (RBI) for monitoring ATMs along with banks. The offer was ignored but an RBI survey of 4,000 ATMs in 2016 found that one-third of all ATM are non-functional, for various reasons.

Comments

User

B. Yerram Raju

9 years ago

Rationalizing the numbers is important, no doubt. More important is that they should work like ATMs and the restrictions currently imposed like only three times free access up to the designated limit of withdrawal and five times in other areas; Rs.10-15k at a time in other areas should be removed. When the banks give a facility to the customer it should serve its full intended purpose.