ATM cash withdrawals are coming back steadily, and so is deployment

ATMs to touch 365,000 by 2027, more in semi-urban, rural areas

Cash withdrawals from automated teller machines (ATMs), which took a hit during the past one-and-a-half years due to the Covid-19 pandemic, have gained momentum once again as normalcy in economic activity is returning with infections ebbing.

Cash withdrawals from ATM through debit cards were close to Rs 2.5 trillion in March 2020. After the nationwide lockdown was imposed on March 25, 2020 withdrawals almost halved to around Rs 1.3 trillion. They started to pick up in the later part of 2020, and reached a peak in March 2021, touching Rs 2.84 trillion. After dipping briefly during the months of April, May and June due to the second wave of the pandemic, withdrawals have started inching up to the pre-pandemic levels.

“Cash withdrawals from ATMs are also rising, which now close to 85 per cent of the pre-Covid period,” said Navroze Dastur, Managing Director, NCR Corporation, the company that has deployed almost half of those machines in the country.

“We expect withdrawals going back to pre-Covid levels during the festive seasons,” Dastur told Business Standard.

One heartening sign for the industry is that the average withdrawal per transaction in the ATMs have now surpassed the pre-pandemic level, from Rs 3,800 to Rs 4,500.

Underpenetrated SURU

The growth in number of ATMs in the country stagnated in the past few years because banks are replacing the older machines and deployment of new machines took a backseat.

However, in the last one year, deployments of new machines are also taking place at a brisk pace.

In the last one year, till September, banks have deployed around 7,000 new machines, apart from replacing the old ones. As on September 2021, there were 241,000 ATM machines in the country. Between 2019 and 2021, more than 17,000 such machines have been deployed in the country.

“There are two reasons for recent growth in ATM deployment. One is white label ATM deployers have started aggressively deploying ATMs, especially now the interchange fee has gone up from Rs 15 to Rs 17,” NCR’s Dastur said.

In the last one year, around 4,000 white label ATMs were deployed.

“WLA deployment is happening tier-III and tier-IV cities – the areas which does not have many ATMs. the density of ATM is high in the main metros, the tier-I and tier-II cities,” Dastur added.

Some of the private sector and public sector banks have also added new ATMs apart from replacing the older ATMs.

India is the third largest market for ATMs, which is as big as the combined market of Germany, UK, Spain, France and Italy, and close to entire Latin America. Despite, being the third largest, ATM penetration continues to be low, particularly in semi urban and rural areas (SURU), industry players said.

Cash management operators and ATM manufacturers are bullish on the medium-term growth prospect for the sector. According to CMS Info Systems, the ATM base of the country is expected growth by six per cent CAGR over the next 6 years, with the number of ATMs in the country is expected to touch 365,000 by 2027.

Some of the state-run lenders have taken a lead in deploying ATMs which are mostly in rural and semi-urban areas. In the last 18 months, State Bank of India, Bank of India and Bank of Baroda has issued request for proposals for 20,000 ATM.