RBI issues norms for non-bank entities to set up ATMs

Mumbai: An ATM at every nook and cranny may become a reality in a couple of years.

The Reserve Bank of India has issued final guidelines permitting permit non-bank entities to set up, own and operate ATMs in India. This is to ensure the expansion of ATMs in smaller centres across the country.

The ATM roll-out conditions stipulated for the non-bank entities, which will be christened as white label ATM operators (WLAOs), are stiff. It has prescribed three schemes under which the roll-out of white label ATMs (WLAs) can happen.

Three schemes
Under the first scheme, WLAOs have to install at least 1000 WLAs in the first year; in the second year install at least twice the number installed in the first year; and in the third year install at least thrice the number installed in the second year.

Under the aforementioned scheme, for every three WLAs installed in Tier III to VI centres, one WLA can be installed in Tier I (metros) to II centres (big cities).

Under the second scheme, WLAOs have to install at least 5000 WLAs every year for three years. For every two WLAs installed in Tier III to VI centres, one WLA can be installed in Tier I to II centres.

Under the third scheme, WLAOs have to install at least 25,000 WLAs in the first year and at least another 25,000 in the next two years. For every one WLA installed in Tier III to VI centres, one WLA can be installed in Tier I to II centres.

What is common under the three schemes is that out of the WLAs installed in Tier III to VI centres, a minimum of 10 per cent should be installed in Tier V and VI centres.

No switchover possible
The RBI has stipulated that no switchover of schemes is permissible. The date for determining the time line for implementation would commence 30 days after issuance of the authorisation.

Non-bank entities intending to set up WLAs may approach the RBI within four months from the date of issuance of these guidelines, beyond which the authorisation-seeking window will be closed.

Only cards issued by banks in India (domestic cards) will be permitted to be used at the WLAs in the initial stage

The RBI observed that although there has been 23-25 per cent year-on-year growth in the number of ATMs (over 90,000 currently), their deployment has been predominantly in Tier I and II centres.

The regulator said that there is a need to expand the reach of ATMs in Tier III to VI centres. In spite of banks’ pioneering efforts in this direction, much needs to be done. Hence, the need for WLAs.