The Union Cabinet on Wednesday approved a proposal to allow 100 pct foreign direct investment without any further required approvals for companies to set up independent ATM networks for banks. The move is aimed at expanding the government’s financial inclusion agenda and attract more investments in the sector.

“This decision will ease and expedite foreign investment inflows in the activity and thus give a fillip to the government’s effort to promote financial inclusion in the country, including the Pradhan Mantri Jan Dhan Yojna,” an official statement said. “This would help in the government’s objective of enhancing ATM networks in semi-urban and rural areas .”

Companies such as Muthoot Finance, Srei Infrastructure Finance and Vakrangee Software, install and operate indepedent ATM networks and are called White label ATM operators.

Currently White Label ATM operators need government approval to bring in foreign investments. This required some processing time and projects were consequently delayed, dissuading investors from investing in such critical areas.

White Label ATM operators can be set up by companies who are not in the banking sector, and need to have a minimum net worth of Rs 100 crore as per the latest financial year’s audited balance sheet, which is to be maintained at all times. Also, if the entity is engaged in any other 18 Non-Banking Finance Companies (NBFC) activities, then the foreign investment in the company setting up WLA, shall also have to comply with minimum capitalization norms for foreign investments in NBFC activities. Besides, FDI in the WLAO will be subject to specific criteria and guidelines issued by RBI.

Conditions
* The non-bank entity intending to set up WLAs should have a minimum net worth of R100 crore as per the latest financial year’s audited balance sheet, which is to be maintained at all times
* If the entity is engaged in any other 18 NBFC activities, the foreign investment in the company setting up WLA shall also have to comply with minimum capitalisation norms for foreign investments in NBFC activities