RBI allows non-banking entities to set-up, own and operate ATMs

In an effort to spread ATM’s network in the country, the Reserve Bank of India (RBI) has offered the non banking entities with a minimum capital of Rs 100 crore to set up and operate ATM’s on behalf of the bank. In its notification, the RBI said non-banking entities ATM’s will be known as white label ATM’s (WLAs). The services offered by these ATM’s will be same as that of regular ones and customers of all banks can use the new ATM’s.

Till now only banks were allowed to set up dispensing machines in the country, which is close to 90,000 ATMs. Non-bank entities, which are planning to set up their ATM’s need to approach the RBI for specific authorization within four months from the date of issuance of these guidelines. To be eligible for the scheme, they should have a minimum net worth of Rs 100 crore as per the latest financial year's audited balance sheet. This is mainly done to expand the reach of dispensing machines in Tier III to VI cities, though there have been a 23-25% growth in ATM’s, but their deployment have been predominately to Tier I & II cities.

As per the notification, the WLA operator is entitled to receive a fee from the banks for the use of their ATM resources by the banks customers, so they won’t be permitted to charge bank customer directly for the use of WLAs. But they will be permitted to earn extra revenue through advertisement and value added services as laid down by the regulatory framework by RBI, IRDA, SEBI, and PFRDA. WLA operator is permitted to have more than one sponsor bank and all the transactions of WLAs serviced by this sponsor bank would be settled through it.

The cash would be owned by the WLA operator, however, the responsibility of ensuring the quality and genuineness of cash loaded at such WLAs would be that of the sponsor bank and at no situation the WLA operator or his agents shall have access to the cash. Further, the RBI has also made three schemes for the implementation, in which the operator has to set up a minimum of 1,000 WLAs in the first year while in the second year it should be twice the number installed in first year and finally in the third year it should be three times the number of WLAs installed in second year.

For every 3 WLAs installed in Tier III to VI centres and one WLA can be installed in Tier I to II centres and out of the 3 WLAs installed in Tier III to VI centres, a minimum of 10% should be installed in Tier V and VI cities.