FinMin takes stock of Budget’s ‘ATM at all branches’ proposal

Finance ministry has also made it clear that banks must have their own ATMs on-site and ATMs of other banks in the vicinity will not be counted.

Even as the country’s largest lender is mulling a usage charge as its ATM operations face losses, the finance ministry has once again nudged public sector banks to set up such devices on-site at all branches by the end of this fiscal.

“Pace of implementation was very slow … The public sector banks, therefore, need to improve this ratio for greater financial inclusion and also to cut down the cost of operations,” said a finance ministry missive to chairpersons of all state-owned banks.

The ministry has also sought a month-wise ATM installation plan from all state-owned lenders till March 2014. “It is a Budget announcement and we will follow it through with all public sector lenders,” said a finance ministry official.

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But yielding to requests by PSBs, the department of financial services in the finance ministry has said that an ATM within a vicinity of 500 metres of a branch of the same bank would be included in the definition of on-site. Banks must try to shift these to the branch in the near future, it has said.

However, the finance ministry has also made it clear that banks must have their own ATMs on-site and ATMs of other banks in the vicinity will not be counted.

The only exception to the rule is State Bank of India and its associate banks as they provide customers unlimited free transactions on group ATMs. The finance ministry is also hopeful that such a reprieve would prevent cannibalisation of business of the associate banks.

“It has been decided that SBI and its associate banks’ ATMs in the vicinity of 500 metres of the respective branch may be treated as an on-site ATM,” the finance ministry has said in a separate missive, warning that in case of multiple branches of the banks in any location, on-site ATMs must be available at each of these branches.

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However, SBI chairperson Arundhati Bhattacharya has called for a commercially viable model for ATMs. SBI has the largest network of ATMs of 32,777 as of September 2013.

As part of the Budget 2013-14, finance minister P Chidambaram had announced that each branch of a public sector bank would have an ATM by March 31, 2014. But as of October 31 last year, out of 34,668 branches identified for installation of on-site ATMs, only 9533 ATMs were installed.