The great disconnect: More bank branches, and same old ATM count

ATM growth remains flat despite rising branch expansion as digital payment preferences and high ATM maintenance costs reshape banking strategy

Even as banks continue to expand their physical branch networks, the growth of automated teller machines (ATMs) has stagnated — largely due to a shift in customer preference towards digital payments. However, branches remain a critical touchpoint for deposit mobilisation and addressing customer grievances, particularly in rural areas where access to digital services may still be limited, experts said.

 

According to Reserve Bank of India (RBI) data, the total number of ATMs owned by public, private, and foreign banks increased to 212,000 in 2024–25 (FY25), compared to 211,000 in 2020–21 (FY21). During this period, the number of bank branches rose to 140,000 in FY25, up from 130,000 in FY21.

 

“The increasing shift towards digital payments and customers’ preference for mobile or internet banking have reduced the demand for ATMs,” said Sachin Sachdeva, vice-president, Icra, adding that the need for physical ATMs has diverged from the need for bank branches. “Since branches provide access and reach — especially to remote areas — some expansion always remains on the anvil,” Sachdeva said.

 

Industry experts also pointed out that running an ATM is a costly affair for banks, with rising expenses related to maintenance, cash handling, and cassette swaps. A structural shift is also underway, as the increased usage of Unified Payments Interface (UPI) has led to lower ATM transactions.

 

“India’s ATM landscape is evolving in response to changing customer behaviour and institutional priorities. Banks are increasingly focusing their efforts on digital channels, especially in urban centres, to meet the rising demand for convenience and cost-efficiency,” said Deepak Verma, managing director and chief executive officer, Findi. 

 

Among banks, state-owned lenders have a stronger ATM presence than their private-sector peers, particularly in rural and semi-urban areas. Private-sector banks are now working to expand their ATM footprint beyond metro cities. However, in metros and urban regions — where the demand for ATMs is lower — they are strengthening their digital presence, experts said.

 

“The demand for cash has not declined in equal measure, particularly in Tier-II, Tier-III, and rural locations, where over 60 per cent of India’s population still resides. The stagnation in growth is less about reduced demand and more about a structural shift. Banks are recalibrating their strategies, choosing to partner specialised infrastructure providers,” Verma added.

 

According to the RBI, demand for ATMs continues to exist in rural and semi-urban regions, where access to digital payments remains limited. Cash withdrawals at ATMs in FY25 stood at ₹30.6 trillion, compared to ₹28.89 trillion in FY21.

 

According to Yashraj Erande, India leader at BCG, there is now a decoupling of ATMs and branches for banks. Earlier, ATMs were considered an extension of branches. Now, branches deal less with cash and more with high-touch financial transactions and other services.

 

“Branch economics work as long as you get deposits in semi-urban and rural areas. But in general, as low-value cash transactions have declined and shifted to UPI, the case for ATMs is weak. I expect that in future, ATMs will stagnate — not collapse entirely, but trend downwards,” Erande said.