Most automated teller machines (ATMs), or machines that dispense cash, are owned by banks. But ones that are owned and operated by non-banking companies are called while-label ATMs (WLAs). They function just the same way as any other bank-run ATM.
Why did the RBI permit them now?
So far, banks have deployed almost 87,000 ATMs across India. Although they are free to put up ATMs anywhere, there is still a huge scope for setting up more ATMs in non-urban and nonmetro cities.
So, the RBI has allowed non-banking companies to deploy white-label ATMs to expand their reach in rural India. However, non-banking companies entering this market will have to maintain a certain ATM ratio between rural and urban India. The RBI is yet to prescribe the ratio.
How does the customer benefit?
As the ATM network expands, more and more people will have easy access to cash as any customer with an ATM card can access white-label ATMs. However, the RBI norm allowing five free ATM transactions will not be applicable at these ATMs.
While the non-banking company won't be allowed to charge a customer directly for the transaction, the costs are expected to be displayed upfront on the screen. It is likely that the bank may recover the transaction charge from the customer separately.
What is the response so far?
As of now, many companies, such as Muthoot Finance and Prizm Payments, have shown interest in setting up these ATMs. It is likely that ATM manufacturers, such as NCR, Diebold and AGS, may also apply for setting up these dispensers themselves. Worldwide, white-label ATMs are in use in Canada and some African and European countries.
WHITE ATMs --
Reviewed by sambasivan srinivasan