June 21, 2012 / 08:58 IST
Moneycontrol Bureau
In an effort to extend the reach of banking services, the Reserve Bank of India (RBI) on Wednesday issued final guidelines to set up white label ATMs (WLAs). With a net worth of at least Rs 100 crore, any non-bank entity can set up, own and operate these ATMs to provide services to customers of Indian banks. They can use their debit card to withdraw money from these automated teller machines.
"Although there has been nearly 23-25 % year-on-year growth in the number of ATMs (90,000+ presently), their deployment has been predominantly in Tier I & II centres. There is a need to expand the reach of ATMs in Tier III to VI centres. In spite of the banks' pioneering efforts in this direction, much needs to be done," RBI said in a release.
A non-bank entity, according to the guidelines, has three schemes to apply for authorization from RBI for setting up WLAs in differnt cities, towns and villages. The approval will remain valid for one year. The scheme and number of WLAs sought to be installed would need to be indicated at the time of application.
The following table shows the scheme details in a nutshell| | Minimum WLAs to be set up in 1st yr | 2nd yr | 3rd yr |
| Scheme A | 1000 | 2000 | 6000 |
| Scheme B | 5000 | 5000 | 5000 |
| Scheme C | 25000 | 25000 |
The coinage White Label ATM...White label means, an ATM that does not have any label of any bank. Here, there are three inherent parties: the non-bank corporate entity, authorized ATM network operators/ card payment network operators like RuPay, Visa or MasterCard and a sponsor bank for cash management, funds settlement as well as customer grievance redressal.
What WLAs mean to a bank?A bank can save huge costs on account of setting up ATMs. On an average, a bank incurs a capital expenditure of around Rs 3-4 lakh per ATM buying. Additionally, operation costs come in the range of Rs 40,000-50,000 per month per ATM depending on certain factors like rent, security and electricity. A popular perception suggests, cooperative banks and regional rural banks with no strong capital strength will be more interested to look at such ATMs.
“It is good for big banks as well. It saves capital and overhead costs," R K Bansal, Executive Director,
IDBI Bank told
Moneycontrol.com.
"It is quite possible that big banks may sell their ATM business to those interested corporates. Globally, white label ATMs are very popular. In India, we are going to get it for the first time. Going forward, RBI may also relax norms for this," he said.
So, who are in the fray to apply for it?Any big corporates (viz.Tatas, L&T and others) keen on banking services will apply. Morever, non-banking finance companies with wider reach in rural and semi urban areas are more likely to go for it.
"We will definitely look at this opportunity. We have to understand the scope for this. Accordingly, we will apply to RBI for setting such ATMs. Our aim is to bring our customers under purview of mainstream banking services," said Umesh Revankar, Managing Director,
Shriram Transport Finance Company.
Charges involved...While the WLA operator (read non-bank entity) is entitled to receive a fee from the banks for the use of ATM resources by the banks' customers, WLAs are not permitted to charge bank customer directly for the use of WLAs.
A WLA operator would be permitted to display advertisements and offer value added services. However, it would not be entitled to any fee from the card issuer-bank.
An opportunity for ATM network providers?"This is a progressive measure by RBI. As a network provider, which is clearing settlements through a bank, I see good business opportunity here. RuPay will benefit with the increase in access points. Many non-bank entities have been clamouring for it. Now, they have to prove their eagerness," said A P Hota, Chief Executive Officer, National Payment Corporation of India.
Saikat Dassaikat.das@network18online.com 
