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India's PSBs allowed to bail out of centralized ATM buying

June 10, 2013

It was a great idea in theory, but ... The finance ministry of India recently repealed its mandate that public sector banks use a centralized bidding process to procure ATMs.

The policy was put in place last year after the State Bank of India introduced rules allowing independent deployers to install and operate ATMs on behalf of the banks.

SBI also set a goal to increase the country's ATM count by 60,000 within two years, bringing more of India's unbanked citizens into the financial system.

According to a report by broadsheet daily DNA, the finance ministry supposed that centralized bidding on ATM contracts would speed up the process of ATM installation in unbanked areas, and that "clubbing" purchases would drive down the cost of machines.

But, slow implementation of bidding groups and inefficient pricing in some areas made the plan a problem for many banks.

As a result, financial services secretary Rajiv Takru announced that banks could use either the bidding groups or their own buying models — keeping in mind that they would be held accountable for their efficiency.

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