Despite the constant demand for cash withdrawals across the country, the number of ATMs operating in India are falling. Figures released by the Reserve Bank of India (RBI) last week showed the number has fallen in the last two years.

Further, the International Monetary Fund (IMF) data showed that India had the fewest ATMs among the BRICS nations.

The fall comes after the operational rules around their maintenance tightened, thus increasing costs to run these machines. The security, software and equipment upgrades imposed by RBI last year has operators struggle to absorb associated costs.

A Bloomberg report said that the ATM operators are not able to recover the additional costs as they rely on fees for their revenue which cannot be increased without an approval from the industry committee. However, if these fees are increased in the future, the banks are likely to recover these from the customers.

Branch rationalization from some public sector banks further reduced the number of ATMs. State Bank of India alone cut 1,000 branches in the first half of FY2018 on absorbing five of its associated banks and a local lender. It is observed that one out of two ATMs are located at bank branches.

Even if the future of banking is digitalisation, there is a need for ATMs in India especially after the substantial increase in the number of residents added to the banking system for the first time under the Pradhan Mantri Jan Dhan Yojana. Direct Benefit Transfers from welfare scheme like subsidies on LPG cylinders are being made to these accounts.

It is therefore, the socio-economically backward section of the country (which forms a large part of the population) that will be highly affected by the shortage in ATMs.

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