MUMBAI, India -- Reserve Bank of India has accelerated the race for the creation of shared ATM networks by allowing the first independent private sector initiative led by Euronet, with IDBI Bank as the settlement bank.
Euronet is also in talks with UTI Bank, Citibank and other private, foreign and public banks, according to a report in the Business Standard.
Two other consortiums led by Bank of India (BoI) and Punjab National Bank (PNB) are already wooing banks with large ATM chains to join their ranks. The BoI-led consortium is in talks with UTI Bank and Citibank, according to the report.
Indian banks' eagerness to forge ATM agreements comes as the Swadhan network prepares to dismantle itself, according to the Business Standard. The Indian Banks' Association, which manages Swadhan, encouraged its member banks to set up their own shared networks by the end of 2003.
(See related stories More of India's state-run banks to share ATMs, State Bank of India, four other banks to link ATMs, India's Swadhan network to end ATM sharing in '04 and ATM sharing continues to grow in India)
"We are looking at tying up with banks which have a networked ATM," said Loney Antony, managing director, Euronet Services India. "One of the major differentiators with other shared networks is that Euronet has the experience of running a network in other markets too. We take the responsibility of monitoring the network. Also the reconciliation and settlement will be done on a daily basis."
ICICI Bank, State Bank of India, UTI Bank and HDFC Bank, which have the largest ATM networks, are believed to be key for the success of the shared networks. However, only UTI Bank, which has about 850 ATMs, is in discussions with other banks, according to the report.
The PNB consortium includes Andhra Bank and Vijaya Bank and PNB is the settlement bank. The BoI consortium includes Indian Bank, Syndicate Bank and United Bank of India. Dena Bank and Union Bank of India are likely to join this consortium, which has 500 ATMs.
Industry sources told the Business Standard that connectivity and pricing will be the key. BoI's consortium will initially offer the service free and later charge less than 10 rupees per transaction (about 21 cents U.S.). Bankers, however, feel that charges less than 20 rupees (42 cents U.S.) may not be economical.
"The fees levied cannot be more than what a bank would like to pay for using an ATM service. It has to be less than the cost which the bank would incur if it sets up its own ATM network. The fees, however, should also induce a bank with a large number of ATMs to cover its costs. The dividing line is very thin. The minimum charge on a no-profit, no-loss basis is around 20 rupees a transaction," an unidentified private banker said in the report.
