Digital drive to slow down ATM expansion

MUMBAI: The pace of expansion of ATMs — cash dispensers that have been at the vanguard of India’s banking penetration since the 1990s — is set to slow further as the Reserve Bank of India seeks to reduce currency circulation by as much as a quarter to help achieve state objectives of increased digital-money usage in Asia’s third biggest economy.

"I don't see a business case for significant expansion of ATMs in the near future," says Pralay Mondal, senior group president at Mumbai based private lender YES Bank.

Prime Minister Narendra Modi, in a nationally televised address on the evening of November 8, 2016, had announced that old Rs 500 and Rs 1,000 bills would immediately cease to be legal tender, setting the course for increased adoption of digital money in a country where hitherto 98% of consumer transactions were made using hard currency.

In lockstep with increasing consumerism and liberalisation in 1991, ATMs mushroomed across both metropolitan and small-town India, revolutionising banking experience in the country.
However, after peaking in 2013, ATM additions have seen a steep fall over the last three years. India added 9% new ATMs in the financial year ended March 2016 compared with 25.4% in 2008-09 and 37.8% in 2009-10, central bank data show.

"We had slowed down our branch and ATM plans significantly even before these changes: After demonetisation, the digital drive has ac-celerated," says Dipak Gupta, joint managing director, Kotak Mahindra Bank.

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