Decrease in the number of Public Sector bank ATMs coincides with the increase in Private Bank & White Label ATMs
Sai Krishna Muthyanolla
June 21, 2019
In the previous story, we looked at how there has been a significant decrease in the number of public sector bank ATMs. In this story, we look the numbers related to private banks & white label ATMs and what it means in the larger context.
In the previous story, we looked at how thereis a significant decrease in the number of public sector bank ATMs. At the sametime, RBI data shows that the gap created by the decreasing ATMs ofPublic sector banks is being covered by ATMs of Private Sector Banks and WhiteLabel ATMs. This is the reason why the total number of ATMs in the country havenot seen much of a variance in-spite of the dwindling numbers of Public sectorATMs.
The number of Private sector Banks have seenan increase in the previous quarter, after a period of decline last year.  In the previous quarter itself, there was anincrease of 2976 ATMs out of the 3712 ATMs added by private banks over the past6 Quarters.
The national wide increase in the private bankATMs is consistent across all the different regions – Metro, Rural, Urban andSemi-urban areas without any particular disparity.
What about States & different Banks?
Private sector banks have managed to increasethe number of ATMs across all the states, with Delhi being the only state whichhas seen a dip in the number of private sector bank ATMs.
Maharashtra, Gujarat, Uttar Pradesh &Madhya Pradesh, the states which had more number of public ATM closures overthe last 6 quarters also happen to be among the top states which have morenumber of private bank ATMs being opened.
In terms of individual banks,  Axis bank is the only exception among privatesector banks, with more than 2000 ATMs being closed in the past 6 quarters.
What about White Label ATMs?
White Label ATMs were first introduced in the year 2012 when RBI introduced new guidelines. These guidelines have been revised multiple times. White Label ATM Operators(WLAO) have agreements with various banks for cash management and fundsettlement.
The number of White Label ATMs has been on therise since Dec’2017.  Like in the case ofPrivate Bank ATMs, a sizable portion of the growth was achieved during theprevious quarter (Jan’19 to Mar’19) when 2722 White label ATMs were added.
One of the main objectives of introducingWhite Label ATMs was to meet the purpose of financial inclusion as recommend by Rangarajan Committee. Since the inception, white Label ATMs havehad a good presence in the Rural and Semi-Urban areas, in line with thedirective and has seen a continuous growth over the years.
With 1875 white label ATMs added in Ruralareas and 706 in semi-urban areas in the previous quarter, these ATMs seems tobe compensating for the huge dip in the number of public sector bank ATMs. Theincrease in the number of White label ATMs in states like Maharashtra,Rajasthan, UP & MP which are the sates where the Public Sector Bank ATMshave gone down the most, further validates the increasing presence of theseATMs in lieu of Public sector Bank ATMs.
The recent guidelines by RBI relaxing the norms for setting up andoperation of White label ATMs might further encourage setting up of such ATMs.
Encouraging White label ATMs can help achieve
financial inclusion
While there has been an increase in the cashless digital transactions, Indian economy still remains to be largely acash driven economy. With more people coming under the gamut of banking system,it is important that ATM facility is accessible, to encourage and retain themas part of the system.
The experience of public sector banks inrunning the ATMs has over the period of time proving to be an avoidableoverhead cost. The cutting down on operation costs does seem to be in the rightdirection in the context of Public sector banks. The reducing numbers of theseATMs is now quite evident.
However, in context of the larger picture, White label ATMs have to compensate for these reducing numbers, as well as expand to locations where Public sector banks could not reach out earlier and where private sector banks would find it less viable.  We will have to wait and see if the relaxation of guidelines by the RBI would increase the number of white label ATMs.
This is a 2-part series on the number of ATMs in the country. The first part looked at the decreasing number of  Public Sector bank ATMs.