Banking and cash management companies, which were struggling to deploy lockable cassette swap in automated teller machines (ATM) across the country, seem to have got some relief. The new plan now would be deploying these cassettes in 30 major cities and the fresh deadline is March 31, 2024.
“In order to fast track the implementation, the Indian Banking Association has come up with a phased approach for 30 major cities, which is to be completed by March 31, 2024,” says Rajan Pental, executive director, YES Bank.
He added that cash-in-transit companies have committed that they can meet the cassette swap requirement in these locations to both the Indian Bank Association and the Reserve Bank of India (RBI).
However, both banks and cash management companies have been struggling to implement these for over five years now
In 2018, RBI asked banks to use lockable cassettes in their ATMs, which shall be swapped at the time of cash replenishment. The move is aimed to mitigate risks involved with open cash replenishment. In essence, cash in transit personnel that are tasked with loading cash into ATMs, would no longer have to come in contact with the cash.
While RBI had initially asked banks to implement cassette swap by March 31, 2021, the deadline was subsequently extended by two years following representation from various banks and Indian banks association expressing difficulties in adhering to the timeline.
From June 2023, banks began loading cash into ATMs through the cassette swap mode. The plan was to roll out the cassette swap mode across 30 cities, including metros in a phased manner. However, they acknowledge that persisting challenges have considerable slowed down implementation of RBI’s mandate.
To begin with, bankers say that the availability of lockable cassettes in the market is a challenge due to a surge in demand and readiness of ATM-managed services providers. Besides, there are operational issues as well.
“A key challenge in implementing lockable cassette swap is the limited number of cash loading agencies operating today,” Kotak Mahindra Bank Group President and Consumer Banking Head Virat Diwanji said, adding that a delay in cash loading and attending first level maintenance calls can lead to situation where ATMs don’t have enough cash.
In addition, till the money is completely finished in one cassette, it cannot be replaced. So, even if the cassette has only 20% of the cash remaining, one cannot remove it from the ATM till it is over. In the existing system, one simply needs to fill the ATM manually. This has increased costs for the banking system. Additionally, the breaking or malfunctioning of cassettes due to higher wear and tear in transportation is also leading to higher operational costs.
Banks note that they are completely dependent on ATM suppliers, managed services partners, and cash replenishment agencies to implement the RBI’s mandate. Hence, any difficulties faced by these entities would automatically impair the ability of lenders to deploy lockable cassettes at their ATMs.
“At some locations, there are not enough vaults while at some others, the vaults are entirely missing. Cash-in-transit agencies have to set up vaults wherever required and this process is taking time,” Pental said, adding that the installation of lockable cassettes is even more cumbersome in cash recycler machines that also accept deposits.
While spokespersons from RBI and Indian Banking Association were unavailable for comment, experts say that there is currently no clear cut solution on how cassette swap can be best implemented.
“Cassette swap is a fairly complex process change for both banks and companies like us. Infrastructure has to be rebuilt or expanded. The banking industry has taken a lot of time to get on the programme, according to RBI’s mandate,” CMS Info Systems Executive Vice Chairman and Chief Executive Officer Rajiv Kaul said.