Banks Raise Concerns Over ATM Shortage with Government and RBI

Banks have informed the government and the Reserve Bank of India (RBI) about a shortage of automated teller machines (ATMs) and have requested clearer rules for purchasing through the government’s e-marketplace (GeM) portal.

Key Points:

• Meeting Concerns: Leading bankers discussed the ATM shortage in a recent meeting with officials. A senior bank executive mentioned that ATM vendors currently lack the capacity to meet demand, prompting banks to approach both the government and the RBI.
• Make in India Impact: Industry insiders noted that the ‘Make in India’ guidelines, implemented in FY20, initially slowed down vendor capacity as they took time to set up operations in India. The Indian ATM market is expected to grow at a 9.2% annual rate between 2024 and 2032.
• GeM Portal Issues: A second bank executive highlighted that state-run banks face challenges due to mandatory purchases through the GeM portal, as not all ATM vendors are registered there. Banks have requested a meeting with GeM officials for more clarity on the process to avoid any regulatory issues.

Procurement Challenges:

• Banks have asked for permission to issue independent requests for proposals (RFPs) for ATMs if they follow all guidelines.
• The ATM shortage is particularly problematic as banks are transitioning to lockable cassette mechanisms in ATMs, a change directed by the RBI. This upgrade involves swapping cassettes during cash replenishment instead of filling them on the spot.

Implementation Delays:

• The RBI directed a phased upgrade to the new cassette system, but only 30% of vendor-managed ATMs have been upgraded so far, leading to concerns about potential regulatory fines.
• Poor infrastructure, including vaulting arrangements, has also delayed the implementation.

Industry Response:

• According to ATM service providers, the initial constraints on cassette swaps are now being resolved, and there is no severe shortage of ATMs to meet the increased demand.
• Manjunath Rao, president of managed services & technology solutions at CMS Info Systems, noted that banks are also installing cash recycling machines to improve efficiency and customer experience. He emphasized that the GeM portal is robust and that the industry is ready to meet the growing demand for ATMs.