Even with an approximate of 1.30 lakh Automated Teller Machines (ATMs) in the country, growing at 27 per cent year-on-year, India is considered to be an underpenetrated market compared to other contemporary nations. For every 10 lakh of its population, the US has 1,390 ATMs, UK has 530 ATMs and China has 211 ATMs, while India has only 98 ATMs for the same number of people.
Though the country has been adding an average of over 16,000 ATMs every year for the last five years, the growth is largely concentrated in the urban markets. For rural areas, this development has remained a distant dream. This can be attributed to poverty, illiteracy and lack of regular income of the unbanked as well as banks’ limited reach, high transaction costs and unsuitable product portfolios. Also, as the normal banking model is found wanting in terms of scalability, convenience, reliability, flexibility and continuity, banks hesitate to set up shop in rural areas. However, now the situation is set to change.
Understanding the need to take banking to rural and under-penetrated tier 3-6 areas of the country, the Reserve Bank of India (RBI) released guidelines in June 2012 for the introduction of white label ATMs (WLA). These are essentially ATMs that are owned and operated by non-banking companies and do not display any bank’s branding.
WLAs serve customers from all banks and will be interconnected with the entire ATM network in the country. The guidelines specified focuses on increasing rural accessibility of ATMs. Customers from any bank can withdraw cash from such white-label ATMs, with similar functioning as a bank ATM. In terms of previous rules, only banks were permitted by Reserve Bank of India (RBI) to set up ATMs as extended cash delivery channels.
Since banks treat ATMs as a cornerstone of their alternate channel strategy, WLAs are intended to serve as an important medium of banking for consumers. WLAs have proved to be a useful addition to the existing banking network and is addressing the underpenetrated semi urban and rural market which till date had minimal or negligible access to