Third party ATMs on the anvil

To help banks cut costs,the RBI will soon issue norms on revenue sharing,usage

Banks will no longer need to own and run their own ATMs with the Reserve Bank of India finally agreeing to banks demand to allow companies set up third party ATM networks. Banks will become a member of the third party network so that their customers can access it.

The central bank will issue draft guidelines shortly on third party ATM management. The guidelines will lay down the conditions,revenue sharing methodology and instructions on how to use, a source in RBI said.

In India,while a third party can set up the ATM network for banks,the ATMs themselves are required to be owned by banks. The ATMs are also required to be branded by banks. Thus,white-labelled ATMs are not permitted in India. In the US,Europe and many other countries,a third party creates the infrastructure of network and operates it. Banks can simply become their members and their customers can utilise the ATMs network of the operator.

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Companies like Euronet and Star have ATM networks in Europe and the US,respectively. They are not banks,they just run the ATM network and the branding and ownership of the ATM also lies with them, said a banker. Industry insiders say that the debate around it has been going on for over two years now and several players have approached the banking regulator to allow this. This helps banks reduce costs by not having to make capital investment in setting up a large-scale ATM network.

RBI maintained that ATM business is a banking business and we cant allow a third party to do banking business, said a banker who did not wish to be identified. But the finance ministry too backed the banks demands to permit third party ATMs. Finally,the RBI has agreed to take a favourable view.

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