STRATEGIC PARTNERS
March 11, 2003
MUMBAI, India -- The Swadhan shared payment network service that was created by the Indian Banks' Association (IBA) in 1997 for its member banks to share their ATMs is being dismantled.
According to a report in the Business Standard, the IBA management committee recently decided to withdraw itself from running the network from the end of 2003.
"The IBA took the leadership in setting up the network at a time when banks were not taking technology initiatives on their own. Now separate groups of banks are setting up their own networks and IBA does not need to be there," an association executive told the Business Standard.
(See related stories ATM sharing continues to grow in India, More ATM activity by Indian banks, Another ATM sharing agreement in India, More Indian banks agree to share ATMs)
Swadhan has connected 32 banks -- public sector banks, private sector banks, foreign banks and co-operative banks -- with more than 1,000 ATMs (both online and offline). It was started with the intention of reducing the investment that is required to deploy ATMs in different locations.
India Switch Company (ISC) won IBA's mandate in early 1997 to service the Swadhan network via a Base24 switch for five years. The contract expired in January.
The ISB will continue to to run the network through 2003 -- albeit under some slightly different conditions. For instance, network fees will no longer depend on the number of transactions at ATMs.
The arrangement will end on Dec. 31. This will give the participating banks time to make their own arrangements," the source said. "Banks are now striking alliances for ATM networks."
Swadhan has proved operationally uneconomical, according to the report, with an average of just 90 monthly transactions per ATM. In contrast, some of India's private sector banks boast average monthly ATM transactions of up to 6,000.
The 32 Swadhan member banks have issued a total of 3 million ATM/debit cards. In contrast, ICICI Bank, which has its own switch and is on an aggressive ATM expansion plan, has issued 3.2 million debit cards and 1.9 million ATM cards.
