According to initial estimates by ATM operators and cash logistics businesses, the Reserve Bank of India's (RBI) plans to fine banks Rs.10,000, if ATMs are empty for more than 10 hours, will boost all lenders' expenditures to Rs. 125-200 crore.
The ATM industry will die as a result of the recommendations. The timeliness of this circular astounded us. How do they expect us to follow the instructions if lockdowns are put in place because of the covid-19 pandemic? These recommendations were not well-considered and were implemented without consultation. If this is adopted, current ATMs will have no choice but to be shut down. The trade group has written to the banking regulator, expressing its displeasure and requesting a reconsideration of the authority's decision. According to industry experts, an ATM generally runs out of cash six times each month. This issue affects nearly half of the 2,13,000 ATMs in the country. The State Bank of India (SBI), which has almost 64,000 ATMs, would bear the brunt of the financial strain.
The restrictions are well-intentioned, but they don't go far enough. We are not in charge of the full operation. The suppliers are responsible for any fines. They are plainly uncomfortable and have expressed their displeasure. We'll have to figure out a method to keep suppliers and banks from losing money. The rules come as banks prepare to execute the RBI's 2018 circular, which compels them to carry cash in cassettes during the government's designated hours of operation. Most ATMs are currently supplied via open cash top-up, which involves putting cash into the machines on the spot. To replace the current method, the RBI has instructed banks to guarantee that lockable cassettes be switched at the time of cash replenishment in ATMs and that this is done by March 2022.
The cassette swap rules were issued by the RBI four years ago, and banks have yet to implement them. Because of the high expenses, banks are plainly hesitant to do so. Before the RBI issues such recommendations, it is necessary to conduct a dialogue with stakeholders. According to ATM operators and managed service providers, imposing a penalty will not alleviate the problem of cash availability in ATMs (MSPs). Banks must guarantee accurate cash forecasting and timely availability of ATM-compatible currency. Cash mobility is prohibited after 8 p.m. in metropolitan regions, 6 p.m. in semi-urban areas and 4 p.m. in rural areas, according to the Ministry of Home Affairs (MHA). “It's nearly noon by the time we collect the money from the banks. As a result, if banks are not ready to deliver cash indents on schedule, I cannot be held responsible for assuring ATM cash availability. We are paid less than $10,000 each month to manage an ATM. If the penalty is applied to each cash-out, our payment would exceed our income," said Rituraj Sinha, group managing director of SIS, the world's largest security and cash-in-transit firm.
Banks have stated that if more restrictions are imposed, they will be unable to operate ATMs and will have to rely on other bank ATMs to conduct transactions. However, digital transactions are increasing, and at a cheaper cost, and banks will see an increase in the number of transactions going online, decreasing the strain on ATMs.
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