India shutting down ATMs even as people use them more
Finding an ATM in India is getting tougher even as dependence on cash persists, thanks to tighter regulations that make it more costly to run the machines. The number of ATMs in the country shrank in the past two years despite an increase in transactions, Reserve Bank of India figures showed Saturday. India already has the fewest ATMs per 100,000 people among Brics nations, according to the International Monetary Fund. The drop may continue as banks and ATM operators struggle to absorb the cost of software and equipment upgrades mandated by the central bank last year to bolster security. That risks undermining Prime Minister Narendra Modi’s campaign of increasing financial inclusion in a nation where cash remains king less than three years after he pulled most banknotes from circulation.
“Declining numbers of ATMs will impact a large segment of the population, especially those who are socio-economically at the bottom of the pyramid,’’ said Rustom Irani, managing director at Hitachi Payment Services Pvt. Ltd, a provider of the machines. “Penetration in the country is already very low.”
As security costs swell, ATM operators are being squeezed because the fees they rely on for revenue remain low and can’t rise without the approval of an industry committee. ATM operators— which include banks as well as third parties—charge a so-called interchange fee of ₹15 to the lender whose debit or credit card is used for cash withdrawals.