Indian Economy News

White Label ATMs (WLAs) to drive ATM penetration in India with a greater focus on Tier III to VI centres

The Reserve Bank of India (RBI) has informed that in order to boost ATM penetration in the country, with a higher emphasis on Tier III to VI locations, non-bank entities have been authorised to set up, own, and operate White Label ATMs (WLAs) in the country. This move is intended to broaden access to banking services, particularly in smaller towns and rural areas, as well as to promote financial inclusion.

This was mentioned by Union Minister of State for Finance Dr. Bhagwat Kisanrao Karad in a written reply to a question in Rajya Sabha. According to the Minister, WLAs give financial services to bank customers in India using bank cards (debit/credit/prepaid).

Apart from cash withdrawals, these ATMs offer a variety of services such as account information, cash deposits, bill payments, mini/short statement creation, PIN changes, and requests for chequebooks. The RBI has implemented a number of measures to ensure the viability and smooth operation of WLAs. Notably, the central bank allowed White Label ATM operators (WLAOs) to source cash from retail shops in a circular released on December 30, 2016, addressing cash availability challenges. In another key move, the RBI in a circular issued on March 7, 2019, encouraged non-bank entities to participate in the ATM business by allowing WLAOs several powers.

These include direct purchases of wholesale cash from the Reserve Bank's (issue offices) and currency chests, sourcing cash from scheduled banks, offering bill payment and Interoperable cash deposit services, displaying advertisements related to non-financial products/services, and allowing banks to issue co-branded ATM cards in collaboration with authorised WLAOs, thereby extending the benefit of 'on-us' transactions to WLAs.

Furthermore, on October 15, 2019, the RBI introduced on-tap permission for WLAs, expediting the process for their establishment and operation. Currently, India has four authorised non-bank organisations operating White Label ATMs, and their presence is projected to dramatically increase overall ATM penetration, particularly in tier III to VI areas.

Concerning consumer protection, Dr. Karad stated that from 1 April 2022 to 30 June 2023, the RBI's Consumer Education and Protection Department received a total of 98 complaints against WLAs. These complaints are handled by the RBI's Consumer Education and Protection Cells (CEPCs), which methodically analyse each case based on its merits, supported by documented evidence, and consider comments from the Regulated Entity (RE) while assuring conformity to regulatory norms.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.