Automated Teller Machines, or ATMs, are ubiquitous. For many, they are the main source of cash withdrawals, with 2.21 lakh ATMs spread across the country. Over the last decade they have become a critical component in India’s larger payments landscape. Now, the Confederation of ATM Industry claims that there is a risk that a large number of ATMs in non-urban locations may soon be shut down on account of new regulations introduced by Reserve Bank of India. The industry association claims this could also adversely impact India’s Financial Inclusion Programme.
The financial inclusion programme, which includes the universalisation of banking, has resulted in sharp growth in debit cards. These cards are used mainly to withdraw cash from ATMs; typically around Rs 2.70 lakh crore a month. In this respect, they remain more important than even the fast growing mobile payment system. It’s precisely for this reason that RBI has to step in to establish standards as banks have largely outsourced this work to third parties. The current RBI regulations are not arbitrary. Their backstory is that two years ago the central bank announced that it would constitute two high level inter-agency committees to review the entire spectrum of currency management.
The enhanced requirement for the Cash Logistics Industry is the outcome of detailed discussions by two committees. If anything, the financial inclusion programme makes it necessary to enhance security measures. It is the responsibility of banks to ensure that the cash logistics industry meets the new security and financial requirements. There can be a case where the industry may need an extension in deadlines but scaremongering is not the best way to go about it. In an age of increasingly sophisticated fraudsters, the cash logistics industry cannot expect their standards to be static. The best thing to do is work along with the banks to enhance standards.
This piece appeared as an editorial opinion in the print edition of The Times of India.
via TOI Blog
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