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India to redefine ATMs as bank branches

12 October 2016  |  6280 views  |  2 atm

The Reserve Bank of India has moved to redefine ATMs in remote rural areas as bank branches, to counteract the decline in traditional full-feature outlets and improve financial inclusion.

Noting the growing popularity of mobile banking in India, the RBI wants to ensure the availability of banking services in all areas through low cost delivery channels by bringing fixed point locations such as cash machines on a par with bank branches.

States the central bank: "In the light of the rapid developments in technology and associated digital and telecom revolution, banks are looking at alternative approaches to enlarge their footprints and reach out to the unbanked and underserved centres in remote areas in a cost effective manner."

To aid the process, the RBI is abolishing rules that only allow banks to post security guards at ATMs, paving the way for the positioning of bank staff as support for people using remote cash machines.

Henceforward, "any electronic kiosks or ATM cash deposit machines, if manned by banks' staff or business correspondent for providing limited customer-based banking services for their walk-in customers, should also be treated as a banking outlet," states the Bank.

The RBI is calling on banks to collate and compile data that monitors the transactions in these outlets to set against financial inclusion targets in the provision of banking facilities in unbanked rural centres.

States the RBI: "With a view to facilitating financial inclusion and providing operational flexibility on the choice of delivery channel, it was considered necessary to redefine branches and permissible methods of outreach keeping in mind the various attributes of the banks and the types of services that are sought to be provided."

Comments: (2)

A Finextra member
A Finextra member | 12 October, 2016, 12:17

ATMs are underutilized in India especially in semi-urban and rural areas for want of awareness of various banking features available in ATMs. Presence of ATMs by bankers/ business correspondents at ATMs will help in bridging this gap and facilitate unbanked/ excluded populatiion to be aware and transact using the features of ATM. - Mallik Reddy, Principal Consultant, JMR Infotech

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Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India | 19 October, 2016, 14:29

It is good initaitive required with one more dimension to be added - White Label ATM deployment. RBI has awarded WLA license to more than 8 companies (NBFC) with networth of more than 50 CR in last Three years.

Except TATA Communication - IndiCash other WLA players have not deployed major numbers and still in process of roll out.

Such directives will help WLA players to provide several more incentives and revenue sources to partner with banks for several banking services in Rural and Semi urban areas as they are suppose to deploy ATMs in ratio of 3:1 (3 ATMs in Rural with 1 in Urban or Metro).

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