New Move by RBI - Non Banks To Set up ATM's ~ Stay Updated

Till date ATM's usually refer to the property owned by banks. But from today the situation is going to change. India's Banking Regulator RBI has come up with a new Idea to allow the Non-Banks to set up ATM's. There are around 80,000 ATM's in the country. ATM's are growing at a rate of 30% per year. But when compared to other countries the number of ATM's India having is very less. There are still some towns and villages in India which haven't experienced
the revolution in banking sector yet. In order to expand the banking services and reach of these services RBI ha decided to allow Non Banking Entities to open ATM's all over the country. This helps to ensure the growth of ATM's with the involvement of corporate.

RBI in its release said that

RBI has reviewed the extant policy on ATMs and it has been decided to permit non-banks to set up, own and operate ATMs to accelerate growth and penetration of ATMs in the country. Such ATMs will be in the nature of White-Label ATMs and would provide ATM services to customers of all banks.

Draft Guidelines to operate these ATM's are also laid by the regulator.

These ATM's owned by the Non Banking Entities will be called as White Label ATM's (WLA).

Any Non Banking Entity (An Individual Co or a large Corporate House or Conglomerate) can apply for RBI asking permission to open ATM's. To get this permissions the ATM operator need to choose a Sponsor Bank and get associated with it by opening a Settlement Account. This account acts as the source of funding. This sponsor bank is responsible for all the transactions at these ATM's.

These operators will not have direct access to Core Banking Services.

Another condition is that the sponsor bank has to be a member of one of the ATM sharing Networks (Consortium). The 2 consortia in India are National Payment Corporation of India and Cash Tree led by Bank of India.

The most important and mandatory condition is that the operator who applies for an ATM must have a minimum net worth of 100 crore.

Only Cards issued by the banks must be used at the WLA's. No deposits acceptance into the WLA operator account or any other account indicated by the WLA is not permitted.

How WLA operators get benefited from this ?

To Deposit or Withdraw money from the WLA's the customer need to pay a certain fee. which will be shown on the ATM Screen. A WLA operator can also earn extra revenue from the advertisements which he can place in/outside the ATM premises.

The Director of a Bank opined about this step by RBI as :

This step is to provide more benefit to customers by providing greater access to banking services. He also added that Banks will earn fee income from the WLA operators. However, banks will not stop expanding their own ATM networks in a cost-effective manner," he said.

In redressing any customer complaint relating to failed ATM transaction will the primary responsibility rests with the issuing bank with necessary support to be given by the sponsor bank.

So what do you think of this move by RBI? Will it be helpful or not?
image credit: dailybhaskar