Bank / Credit Union
India's white label ATMs may face closure in rural areas
October 16, 2020
White label ATM operators in Mumbai may be forced to close down ATMs, which are predominantly deployed in semi-urban and rural areas, due to restrictions imposed by the Reserve Bank of India on the opening of current accounts, according to a Hindu Business Line report.
Last month the RBI sent out a notice, 'Opening of Current Accounts by Banks - Need for Discipline,' to enforce credit discipline among banks and borrowers, but the notice also targets WLAOs. These ATMs are generally set up, owned and operated by non-banks and are authorized under the Payment and Settlement Systems Act, 2007, by the RBI.
Using these ATMs is similar to using an ATM of a bank and, as long as a user is within their free ATM transaction limit, WLAOs won't charge for transactions.
The RBI has restricted the opening of current accounts with any bank other than the lender banks, which are private and foreign banks. However, these banks generally don't have the capability of providing currency in remote corners of the country, and any bank that does have the capability, doesn't want to provide the WLAO the working capital.
As per RBI data, there are eight WLAOs with collective pan-India ATM deployment of about 24,000 as of July 2020. ATMs deployed by WLAOs account for about 10% of the total ATMs deployed in the country, according to the report.
"A significant amount of money is withdrawn by [WLAOs] from current accounts outside the key lenders. As of today, we have working capital loans from various banks. There is no restriction on which bank we can borrow money from. So, that will come to a halt. If this [notice expects compliance by November 6], we are in for serious trouble," K Srinivas, MD and CEO, BTI Payments, and spokesperson, Confederation of ATM Industry, told the news outlet.
WLAOs want the RBI to either grant them an exemption from the requirements outlined in the notice, or enforce a restriction that any accounts opened by WLAOs cannot be used for anything else other than withdrawing cash for filling ATMs, according to the news report.
