A recent press report said that the Finance Ministry has favored in setting up of white-level ATMs in the country in order to increases the diffusion of banking services. White-level ATMs are not owned by banks but by private ATM service providers. Such ATMs will help take banking services to remote places. Besides, it will help sponsored banks to set-up ATMs without incurring capital expenses for owning money dispensing machine.
The Finance Ministry has told the Reserve Bank that the lead bank or sponsored bank of a district would be given the responsibility of filling cash and meeting other operational requirement. Thus, the bank will be saved from making investment for setting up ATMs, and even other expenses like technical infrastructure and security would be borne by non-bank entities.
Currently, white label ATMs are not permitted by the RBI. As it is not owned by any bank, State-owned IDBI Bank is creating a separate venture along with private ATM service for providing this service. At present, brown label ATMs are allowed in the country. In such cases, the hardware as well as lease is under the ownership of the service provider, while connectivity and cash handling and management is the responsibility of the sponsor bank. The ATM is named under the brand of the sponsor bank but the ATM machine is not owned by the bank. At present, banks allow customers of other banks five free-of-charge cash withdrawals at their ATMs every month but end up paying around Rs 3,000 crore a year to settle inter-bank transaction costs. At present, the installed base of ATMs is India is 75,000 as of June 2011.
The bank ATMs are now having long queues due to the festival season. Banks have announced special interest rates for home loan, personal loans, car loans etc as for the festival season which is expected to continue toll the end of December 2011.