News

India says yes at last to third-party ATMs

February 8, 2012

The Reserve Bank of India has agreed to banks’ demand to allow companies set up third-party ATM networks, according to a news story at indianexpress.com.

As a result, banks in India no longer will have to own and operate their own ATMs. Instead, they may provide customer access to ATM banking services through a third-party network.

Historically, third parties have been allowed to set up the ATM networks for banks, but the machines themselves had to be owned by the bank, and all ATMs had to be bank-branded. Thus, “white-labelled” ATMs were not permitted in India.

Industry insiders say that the debate around third-party ATM networks has gone on for more than two years. Several key players have approached the banking regulator to allow the practice, which would help banks reduce costs by allowing them to avoid the capital investment in a large-scale ATM network.

“RBI maintained that ATM business is a banking business and we can’t allow a third party to do banking business,” said a banker who did not wish to be identified. However the finance ministry backed the banks’ demands to permit third-party ATMs and RBI finally acquiesced.

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