News

ATM growth in India isn't slowing — it's going backward

October 31, 2017

ATM installations in India aren't just showing signs of a slowdown. In fact, there are indications of shrinkage in the nation's installed base of machines.

The ATM count in India fell by 358 units from June to August, according to a report by Times of India. That's a decline of 0.16 percent, compared with a compound annual growth rate of approximately 16.4 percent over the previous four years.

The report attributed the reduction to a pair of trends: firstly, the government's demonetization last November of 50 rupee and 200 rupee notes, which led to widespread cash shortages and a pivot to digital transactions; and secondly, the high cost of ATM rental space.

Monthly lease expense for a prime ATM location in Mumbai can approach 40,000 rupees ($617), while operating costs — including the salaries of security guards — can range from 30,000 to 100,000 rupees ($463–$1,542) per month, Times of India said.

ATM distribution remains a problem in India, according to Sanjeev Patel, CEO of Tata Communications Payment Solutions,.

"The people who desperately need cash are in rural locations where only 15 percent of the more than [200,000] ATMs serve nearly 67 percent of our population," he told the publication. "Urban India has already got onto the digital bandwagon, rural India has not."

In urban areas, cash management seems to be an ongoing challenge. The Daily Pioneer reported that nearly one-third of the ATMs in Ranchi, a city of 1 million, ran short of cash on the second day of a recent four-day weekend.

"[W]hen there is holiday … ATMs go out of cash for sure," one cardholder told the publication. "It happens most of the time that one ATM out of two is dispensing cash at some point and [the] other lays defunct for days causing long queues."