Two and a half-years after the demonetization, Indians are using cash more than ever. However, the number of ATMs is declining due to inadequate interchange fees as well as regulations which increase the cost of operating ATMs.
Figures released by the Reserve Bank of India (RBI) shows continuous ATM transactions by citizens who are struggling to deal with the gradual decline of automatic teller machines. This is because tighter regulations are making the maintenance of ATMs a costly affair.
There is no denying that India is in dire need of ATMs – in March 2018, the recorded amount of ATMs was 222,066, equal to 17 per 100,000 people; which is very few compared to the US where there are 137 per 100,000 people. Despite the growth of the formal banking system through the addition of 355 million Indians using cash, the number of ATMs in India has declined over the past two years.
According to former RBI deputy governor, “Interchange fees are the biggest factor behind muted growth of ATMs. They have to reflect ground reality. Banks are finding it cheaper to pay interchange fees to other banks rather than operating their own ATMs,” states a report earlier this month by Bloomberg. But there are banks such as the State Bank of India, HDFC Bank and ICICI Bank offering limited number of ATM transactions free of cost every month, NDTV reports.
Despite attempts in relieving consumers of their now limited options, many are still left with little to no room for participating in the country’s economic scene. “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.
Yet another narrative of how jumping towards a digital society limiting access to cash affects citizens in ways that could lead to a bigger and more complex problem.