ATM machine companies in India are warning that they will have to shutter as many as half of India’s cash machines because of new regulations, reported the Financial Times.
According to a report in the Financial Times, citing the Confederation of ATM Industry (CATMi), the group said it will have to close down less profitable cash machines, many of which are located in remote rural areas and small towns. That, noted the report, will hurt access to cash in places where it is already hard to access banking services. Some of the new regulations go into effect in 2019 and call on the cash machine companies to upgrade software of many of the 240,000 ATMs in India. They also have to increase the number of armed guards, and install global positioning systems and cameras on cash transit trucks that deliver cash to the machines, noted the report.
The Confederation of ATM Industry argues that meeting those requirements would be costly to the tune of $500 million. That is a cost many of the companies can’t afford on the heels of the cash ban back in 2016. “ATM businesses are already on very shaky ground,” said Sanjeev Patel, a member of CATMi and chief executive of Tata Communications Payment Solutions told the Financial Times in the report. “Now you’ve got a crippling level of cost.”
Meanwhile, Himanshu Pujara, managing director of Euronet Services India and a CATMi director, told the Financial Times that as it stands many of the machines in the networks are barely breaking even. With the new rules, he said there will be no option but to shut down those barely profitable ATMs. The report noted that India has 21 cash machines to every 100,000 adults. That compares to 55 in Indonesia and 129 in the U.K., noted the report, citing data from World Bank.
Commercial banks that outsource operations of cash machines to third parties also said they can’t handle the increased costs of upgrading the machines in their networks. At the same time, they are concerned that the networks can be disrupted, noted the report. We need to find a way out of this,” said VG Kannan, chief executive of the Indian Banks’ Association.