After Delhi and Tamil Nadu, Karnataka has third highest ATM density

BENGALURU: Karnataka ranks third in terms of ATM density with 29 ATMs per lakh population after Delhi (52/lakh) and Tamil Nadu (35/lakh) respectively. The ATM footprint in the state is a few steps ahead of Maharashtra (23/lakh) and Andhra Pradesh (25/lakh) and way ahead of Jharkhand (11/lakh) and Chhattisgarh (13/lakh).
Rural Karnataka is underserved when compared to Bengaluru city, having 12 ATMs/lakh population, a far cry from the latter’s 52 ATMs/ lakh, as per data from the Confederation of ATM Industry.

Demonetisation has dealt a huge blow to the profitability of the ATM industry. “In rural Karnataka, people travel at least 15-20km to reach the nearest ATM. Still, there’s no surety that the machines will have cash. While it is commercially viable for us to load cash in cities like Bengaluru which clock higher transactions, in rural areas we can only load 2-3 times a week. And there’s the cost attached to transporting cash and the interest being paid out on idle cash,” said K Srinivas, member, CATMI and CEO of BTI Payments.

India, on an average, has fewer ATMs compared to several other countries. India has 18 ATMs per lakh of the population, considerably lower than countries like China (63), Brazil (81), Japan (107) and Australia (132). ATM penetration in India is also skewed towards metro and urban centres where there are 52 ATMs per lakh population, compared to rural areas, where there are only 5-11 ATMs per lakh of the population. With banks burdened by NPAs and stressed assets, ATM expansion has not increased in the past three years. Between March 2015-March 2018, installed ATMs saw an increase of 46% in metro and urban centres, and 22% in rural areas.

“We’re seeing a huge demand in rural areas because of the massive increase in Jan Dhan Yojana accounts and rapid distribution of RuPay cards. With millions of rural customers now having debit cards, there is demand but inadequate supply," says Srinivas.

“We’re seeing ATM transactions increase in tier-2, tier-3 cities and rural areas. But banks still shy away from ATM expansion without a minimum of 3,000 cards in the area. They need 150 ATMs transactions per day to make it commercially viable. With banks reeling under NPAs, ATM expansion is their last priority,” said V Balasubramanium, president of ATMs and payment systems in FSS.

Banks, meanwhile, are calling for an increase of the interchange rate. "Currently, the interchange rate is Rs 15 per transaction. And it has not increased in the past 3-4 years despite costs having shot up. SBI has the largest ATM network in the country and in the most remote locations. With so many other-bank customers using our ATMs, it is really a drain on our resources to have the interchange at Rs 15, instead of Rs 18 or more,” said a DGM of SBI.