Fewer ATMs, more UPI: India's banking sector shifts to digital payments
- IBEF
- November 11, 2024
Amid record-high cash circulation, Indian banks are reducing the number of Automated Teller Machines (ATMs) and cash recyclers, driven by the increasing adoption of digital payments, particularly through the Unified Payments Interface (UPI), and a shift towards digital banking. Data from the Reserve Bank of India (RBI) shows a decline in ATM numbers from 219,000 in September 2023 to 215,000 in September 2024. Off-site ATMs have dropped more significantly, falling from 97,072 in September 2022 to 87,638 by September 2024. Industry leaders, including the Chairman of AGS Transact Technologies, Mr. Ravi B Goyal, suggest this shift reflects the banking sector’s focus on digital transformation and expanding services to underserved regions. Mergers of public sector banks have also streamlined networks, combining physical and digital infrastructure.
Despite cash still accounting for 89% of transactions in FY22 and contributing 12% to the Gross Domestic Product (GDP), ATM availability remains limited at just 15 per 100,000 people. Regulations from the RBI, such as those on free ATM usage, interoperability, and interchange fees, have contributed to lower investments in ATM infrastructure. Industry sources suggest that banks might adopt a model of two ATMs per branch—one on-site and one off-site—to strike a balance between digital and physical banking services. This approach aims to meet customers' evolving needs while ensuring adequate access to cash. ATMs have been a key milestone in banking accessibility, with the first machine installed in Mumbai by the Hong Kong and Shanghai Banking Corporation in 1987, revolutionizing financial interactions in India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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