The Reserve Bank of India last week said it would allow private operators to set up white-label ATMs. But, said a news story at mydigitalfc.com, this will not be an easy task for operators given the cost and competition involved in the venture.
WLAs could serve customers of all banks. But setting up a single ATM would require an investment of Rs 5-7 lakh ($10,000–$14,000) apart from other working capital requirements. “Considering all the requirements put together, each ATM will require about Rs 12-15 lakh ($24,000–$30,000) of capital," said Sunil Nair, managing director, Euronet Services India. "Even if an operator is going to put up 1,000 ATMs, we are talking about a huge investment here."
The RBI developed the white-label ATM plan in hopes of taking banking services to unbanked regions of India. A majority of the 87,000 ATMs in the country are in urban areas, according to the RBI. A WLA operator will have to adhere to annual targets and WLA ratios between Tier I-II and Tier III-VI areas as stipulated by the RBI, said the apex bank in its draft guidelines released last week.
Despite the challenges, Euronet is optimistic about opportunities in the Indian market. “Ideally there needs to be one ATM for every 2,500 cards. We have 300 million cards in India," Nair said. "By that logic, we need to have far more ATMs, whether that comes through the white-label ATM model or a bank-deployed model. We are among the countries with the lowest ATM penetration in the world."
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