Replacement of systems more than 7 years old, Centre’s digital push lead to cutting down on new installations

A combination of factors, including cash crunch following demonetisation of high value notes announced in November last, have led to commercial banks cutting down on the number of automated teller machines (ATMs) particularly those not located in branches (off-site ATMs), latest RBI data showed.

According to Reserve Bank of India (RBI), there were 98,092 off-site ATMs in June 2017 against 99,989 in the same month last year. However, on-site (located within a branch) ATMs rose to 110,385 from 101,346 in the same period.

‘Cash crunch’

According to bankers, demonetisation, which led to cash crunch, was one of the factors that impacted ATM expansion.

“Yes, it is true that ATM expansion has slowed,” said a senior official of a large public sector bank on the condition of anonymity.

“Since there was shortage of cash post-November, we decided to go slow on this,” the official said.

The number of ATMs added between June 2016 and June 2017 was a little more than 7,000 while in the comparable period of the previous year, banks had added almost 16,000 ATMs and more than 18,500 in the year before. The total number of ATMs in the country in June 2017 was 2,08,477 as compared with 2,01,335 a year ago.

Large retail-focussed banks like ICICI Bank and HDFC Bank’s off-site ATM numbers show a declining trend over the last one year.

While HDFC Bank’s off-site ATMs decreased to 5,845 from 6,391, ICICI Bank saw the number cut to 8,639 from 9,274. Its overall ATM number at June-end was also lower than in the same month of the previous year.

But SBI’s ATM numbers saw a sharp increase as it merged five of its associate banks and Bharatiya Mahila Bank on April 1, 2017.

‘Low footfalls’

The Centre’s push for digital transactions discouraging the use of cash is also having an impact, with banks going slow on ATM expansion, bankers said.

In addition, ATMs with low footfalls are being relocated. Some of these ATMs, which were on-site, were installed following directions issued by the Finance Ministry during the UPA regime (known as MoF ATMs in banking circles). Replacement of old ATMs is another reason why the headline numbers are not growing at the same pace as earlier years, ATM manufacturers said.

“There is some amount of slowdown currently due to the availability of cash, which was a outcome of demonetisation,” said Navroze Dastur, managing director, NCR Corporation India, told The Hindu.

“That has definitely impacted the market,” Mr. Dastur said. NCR deploys almost 50% of the ATMs in the country.

“What we are seeing today is that a lot of replacement is happening. There are lot of ATMs which are more than seven years old. A lot of banks are replacing those ATMs. That is why probably you are not seeing the increase in numbers,” Mr. Dastur said.

He said it was a normal practice among banks to replace ATMs after 5-7 years as software etc gets dated.

“This is a cycle. We are in the cyclical stage where large number of ATMs are due for replacement. This cycle will be there for another year,” Mr. Dastur said.