Banks have sounded out the government and the banking regulator Reserve Bank about shortage in supply of automated teller machines (ATMs) while making a case for clarity in norms for procurement via the government e-marketplace, or GeM portal, people familiar with the matter said.
Leading bankers had flagged the issue in a meeting with officials last month, they said. “We have discussed the issue internally… It was highlighted that one big issue is that ATM vendors do not have the capacity,” said a senior bank executive, adding that accordingly, representations were made both to the government and the RBI.
Industry insiders said the initial reason for low capacity is connected to the ‘Make in India’ guidelines, which were implemented in FY20, and it took time for vendors to set up Indian operations. The Indian ATM market is projected to grow at a CAGR of 9.2% between 2024 and 2032. A second bank executive said another constraint that state-run lenders face is mandatory purchase through the GeM portal.
“Not all ATM vendors are registered there, and we also need more clarity on the process and guidelines to avoid any vigilance action,” he said, adding that banks have sought a meeting with officials from GeM.
He said they have requested that banks be allowed to float independent requests for proposals (RFPs) for ATMs if all guidelines are met. Bankers have said that the ATM shortage is impacting them more at a time when they are in the process of migrating to lockable cassette mechanisms in ATMs as directed by the RBI.
In 2023, the RBI asked lenders to upgrade their ATMs, where cassettes would be swapped at the time of cash replenishment instead of being filled in machines on the spot.
“While this was to be done in a phased manner, we are short of targets, and this could lead to regulatory action, including fines,” the above quoted bank executive said, adding that only 30% of implementation has been done in vendor-managed ATMs.
“Poor infrastructure issues, including vaulting arrangements, have also contributed to this delay,” he said, adding that banks will seek a further extension to fully implement this due to these constraints.
According to bank service providers, there could have been some constraints on cassette swaps in the initial stage but it is on track now. Also, there is no acute shortage of ATMs to meet increased demand.
“Banks, in addition to ATMs, are now installing cash recycling machines to drive higher efficiency and deliver enhanced customer experience. GeM is a robust portal and as banks do a technological refresh of ATMs, we expect the demand to grow, and the industry is ready to meet it,” said Manjunath Rao, president-managed services & technology solutions at CMS Info Systems, which operates and manages 72,000 ATMs or 47% of overall outsourced ATMs in India.
