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Muthoot Finance has secured in-principle approval from the Reserve Bank of India (RBI) to set up and operate White Label ATMs (WLAs). These are owned and operated not by a bank but a non-bank entity. One may, for a fee, use it for a financial transaction with any bank branch.
Muthoot will set up 9,000 ATMs as part of RBI’s Scheme ‘A’. Under this, RBI gives nod if a company sets up minimum of 1,000 ATMs in the first year, twice the number installed in the first year during the second year and thrice the second year’s installation in the third year.
Muthoot plans to install 1,000 ATMs in the first year, 2,000 in the second and 6,000 in the third year. “The process of identifying sponsor banks and finalising the ATM network across India has already begun,” said K R Bijimon, chief general manager. Suresh Kumar, joint general manager, had said, “We want to leverage our presence in rural markets, as RBI wants most WLAs in tier-III to tier-VI centres and most of our branches are located in these centres.”
According to RBI guidelines, under Scheme ‘A’, for every three WLAs installed in tier-III to VI centres, one can be installed in tier-I to II centres. Of the total WLAs installed in tiers-III to VI centres, a minimum of 10 per cent should be installed in tier-V & VI centres. Till recently, only banks were permitted to set up ATMs as extended delivery channels. RBI then permitted non-bank entities to set up, own and operate WLAs for expanding reach in tiers-III to VI.
Earlier, Tata Communications Payment Solutions Limited, a subsidiary of Tata Communications, had got a licence from RBI to operate WLAs. Yesterday, Federal Bank said it would be a sponsor bank for the Tata WLAs. TCPSL will set up its WLAs under Scheme ‘B’, where RBI requires a company to set up a minimum of 5,000 WLAs annually for three years.
