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Paucity of ATMs leaves money in Jan Dhan accounts less accessible

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Amid lockdown, ATMs often run out of cash; problem is deeper in rural pockets

In a bid to ease the pain of Covid-induced lockdown on poor and low-income households, the government announced a cash transfer of ₹500 per month for the next three months to women holding Jan Dhan accounts. Aside from the fact that the cash transfer will benefit only a little over half of the total Jan Dhan account holders, access to cash is becoming a bigger problem for the poor.

BusinessLine interacted with a few people in villages and in the metros, particularly in the poor and low-income segments, who have been facing hurdles in withdrawing cash from ATMs. Aside from the restriction in movement owing to the lockdown, ATMs running out of cash is also becoming an issue.

“Amid the ongoing lockdown, there are challenges in transporting cash in certain pockets,” said Navroze Dastur, MD, NCR India. “Earlier, ATM service providers were not recognised as ‘essential services’, which impacted transit of cash.”

“With the government now recognising ATM services as essential, issues have eased. We have a large part of our field force operational. However, we do face problems in certain areas. There have also been issues with moving spare parts for ATMs within the States and inter-State due to lack of logistics and transport support,” he added.

The problem is more acute in rural areas. Our interaction last week with residents of Tamil Nadu’s Kundaveli village suggested that withdrawing cash from accounts is becoming a challenging task, with most bank branches shut and no cash in ATMs.

“In rural areas, there are more challenges in ensuring that ATMs are filled with cash all the time,” said Dastur.

Dismal reach

Cash woes in rural India even in normal times persist owing to the lower number of ATMs and hitches in supply of cash to ATMs in these remote areas. The lockdown has obviously made matters worse.

India’s rural areas were the worst hit during demonetisation (November 2016), owing to shortage of cash in ATMs. Ineffective remonetisation had led to the shutdown of many ATMs in rural areas between September 2016 and December 2018. From around 41,633 as of September 2016, the number of ATMs in rural areas fell to 40,807 in the quarter ended December 2018. While the number of ATMs has increased to 45,937 as of December 2019, only about 20 per cent of them are in rural areas.

The reach of private banks in the hinterland is poorer, with just 10 per cent of their ATM machines put up there. Even small finance banks that are intended to help provide last-mile reach in rural areas, have only 17 per cent of their ATMs set up in these areas.

SBI has a little over 11,000 ATMs in rural areas; the second-largest network belongs to Axis Bank but it has a far lower number of ATMs, at 3,277. After the top 10 banks (ending with HDFC Bank having 1,060 ATMs in rural areas), the tally reduces significantly to less than 1,000 ATMs.

White-label ATMs

The RBI has granted licences to non-bank entities to set up white-label ATMs (WLAs), with the aim of expanding the reach of ATMs in semi-urban and rural areas. However, the inability on the part of players to generate ample revenues and expand significantly has limited the number of WLAs in rural areas.

As of December 2019, there were just 10,852 WLAs in rural areas. Also, of the eight players in this market, four — Tata Communications Payment Solutions (3,797) and BTI Payments (2,844), Vakrangee (2,821) and Hitachi Payment (1,192) — alone constitute 98 per cent of the total WLAs.

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