Sunday, December 11, 2011

ATMs in Indian Banking Scene.....

I am not too sure as to how these ATMs entered the Indian banking scene in early eighties!  May be one of the Foreign Banks like Citi Bank might have introduced the facility.  At a time the Indian banking was still in its primitive style without automation or mechanisation, ATMs or Credit Cards were not well known let alone the bankers were also not inclined to offer them by investing heavily as also against stiff opposition from the Trade Unions.  Thanks to reforms and transformation in the most important service industry, in the last two decades we witnessed many changes and advancements in the technology era.

With all the cry for taking banking services to the grass roots level against all odds, in the name of Financial Inclusion or Rural Development, there has been a tremendous increase in the bank branches per se and with an equal number of ATMs all over.  If I have to guess, the figures could be around 85,000 each and a long way to go too.  But the PSBs have taken the lead of offering ATM services in god-foresaken places including mountain tops or national highways and waterways.  Biometric ATMs were introduced in rural areas and for illiterate customers.  As regards security for ATMs, we keep hearing that there are some guarded and some not exposing to all sorts of risks and mis-use.  We can't help it because after all it costs for the banks.  And now, I read from the latest issue of IIBF Vision (Nov 2011) that these ATMs are 'Brown labelled' and "White-labelled"!  

"Brown label ATMS": The news is that 5,000 brown label ATMs are on the anvil.  Hughes Communications  India, a broad-band satellite service provider will set up these ATMs in the country.  The ATM hardware  as well as lease under the ownership of the service provider, while connectivity and cash handling & management is the responsibility of the sponsor bank.  This model has two primary benefits viz., banks will not have to lock their funds in a fast depreciating asset since the capital investment would be undertaken by the ATM vendor.  Also, since the vendor gets a fee for every transaction from the bank whose ATM card is being used, there is an incentive to ensure efficiency in terms of usage.

"While label ATMS" : Hoping to cut transactions costs for banks, the Financial Ministry has asked RBI to allow common ATMs that will be owned and managed by non-banking entities.  Called while-label ATMs, these money dispensers are proposed to be located in non-traditional areas and would levy some usage-fee on the customers.  Globally, such ATMs are operated by Euronext, Clear Card and Ezee ATM.  Currently, banks allow customers of other banks five free transactions of cash withdrawal at their ATMs per month but end up paying around Rs. 3,000 crore a year to settle inter-bank transaction costs.  Setting up a while label ATM may also increase the quantum of withdrawal from an ATM.  As of now, banks fix a cash limit at ATM based on the usage.

No comments: