Almost 1.13 lakh ATMs likely to get shut down by March 2019 in India: Reports

New Delhi: Almost 1.13 lakh automated teller machines (ATMs) across the country may be forced to shut down by March 2019 on account of non-viability of operations brought about by recent regulatory guidelines for ATM hardware and software upgrades, mandates on cash management standards and cash loading methods, said Confederation of ATM Industry (CATMI), the apex body of the domestic ATM industry on Wednesday.

As per a national media report, the number includes approximately one lakh off-site ATMs and over 15,000 white label ATMs. As of September end, there are approximately 2,21,492 ATMs across the country, data from the Reserve Bank of India (RBI) said.

According to CATMI, the move may result in long queues outside ATMs and chaos similar to what the country witnessed when ATMs were not dispensing cash, post demonetization.

Also, a statement from CATMI claimed that a large number of ATMs in non-urban locations may be shut down due to unavailability of operations. If this happens, the financial inclusion programme would be severely impacted as millions of beneficiaries under the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, who withdraw subsidies in form of cash through ATMs, may find their neighbourhood ATM shut.

CATMI also said that its members, including ATM managed service providers (MSPs), brown-label ATM deployers (BLAs) and White Label ATM Operators (WLAOs), are already reeling under the financial impact caused by huge losses during demonetization as cash supply was impacted and remained inconsistent for months.

Reportedly, the situation has further deteriorated now due to the additional compliance requirements that call for a huge cost outlay. The service providers do not have the financial means to meet such massive costs and may be forced to shut down these ATMs, unless banks step in to bear the load of the additional cost of compliances.

According to CATMI, an estimated additional outlay of about Rs 3,500 crore is needed to comply with the new cash logistics and cassette swap method. “These requirements were never anticipated by the industry participants at the time of signing contracts with the banks. Many of these agreements were inked four to five years ago when no such requirements were in sight,” the statement claimed further.

The ATM industry in India has reached a “tipping point”, and unless ATM deployers are compensated by banks for making these investments, there is likely to be a scenario where contracts are surrendered, leading to large-scale closure of ATMs, the statement said.