Banks go slow on ATMs as digital transactions gain pace – The Economic Times

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Synopsis–Public sector banks have shuttered nearly 5,000 automated teller machines in one year alone. However, private sector banks, small finance banks, payment banks and white label ATM operators added ATMs.

With the pandemic spurring a surge in digital payments, public sector banks have shuttered more than 4,600 automated teller machines in one year alone and scaled down their deployment of cash deposit machines, Reserve Bank of India data showed.

Digital transactions surged more than 50%, while those on the Unified Payments Interface platform more than doubled in a year. “The banking industry as a whole is no longer adding any more ATMs — in fact, there has been a depletion in the overall numbers,” said K Srinivas, managing director of BTI Payments. “For a bank, it’s much easier to tell a customer to visit another ATM as one transaction costs Rs 15 and if they were to set up an ATM on their own it would cost much more.”

However, private sector banks, small finance banks, payment banks and white label ATM operators added ATMs.

Indian banks operated a little over 200,000 ATMs nationwide at the end of February, a decline of 1,001 ATMs from a year earlier. PSU banks shut 4,633 ATMs and operated over 134,000 such machines at the end of February.

Private sector lenders added 3,386 ATMs in one year and now operate 72,643 cash dispensing machines. Small finance banks added 204 ATMs in this period.

Experts also ascribe the closure of ATMs to recently merged public sector banks looking to cut cost centres amid the pandemic and banks looking to operate only high-activity ATM centres. Thousands of ATMs across India remain under-utilised as civilians stay at home.

Experts said that in large cities, only ATMs that are close to a bank, petrol pump or hospital are used the most throughout the day.

The surge in digital payments could be the single biggest contributor to banks shying away from adding ATMs. Over the past four years, India’s digital payments market has expanded at a compounded annual growth rate of 23% in volume and 21% in value. It is estimated that the volume will touch 167 billion by 2025 and the value of digital transactions will reach Rs 238 trillion in India.

“If we take only UPI transactions of September 2020, the transaction count was 1.8 billion, which increased to 2.23 billion by December 2020, which is a jump of approximately 24% in the third quarter. While in the fourth quarter, digital transactions jumped by approximately 23%, as in March 2021, transaction count stood at 2.73 billion,” said Vishwas Patel, chairman of the Payments Council of India.

The closure of ATMs comes when currency in circulation has risen to Rs 28 lakh crore, the highest ever. Cash withdrawals from ATMs continued to drop, with their value falling to Rs 2.58 lakh crore at the end of February from Rs 2.82 lakh crore a year earlier. Several banks complain about the cost of operating and maintaining ATMs. The average footfall at ATMs has come down due to the Covid-19 , experts said.

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