Kolkata: ATM cash dispensation has been hit in four states leading to shortage of cash in thousands of automated teller machines. Cash management and logistics
companies have temporarily suspended ATM cash refills, thanks to rising wages and fuel costs. The states that have been hit by cash shortages in ATMs include Delhi, Karnataka, Haryana, and Uttar Pradesh. The rising costs have made it financially difficult for companies to continue operating under existing contract terms. According to news reports, ATM services were affected in many locations across the four states due to the disruption in ATM cash refills for a day. Due to the lack of regular cash refills, people have faced difficulties withdrawing money from some ATMs. However, services are expected to resume soon with several private sector banks agreeing to negotiate changes to contracts and service fees. Discussions are ongoing with other banks on this issue as well. Last month the cash logistics companies have warned RBI and SBI about the growing financial crisis.
Situation in public sector banks
Reports have stated that public sector banks have stayed away from any discussion on fees and terms of services with cash handling companies. This has raised concerns about the services of ATMs of public sector banks. This could be particularly impacted in tier-2 and tier-3 cities, where public sector banks have a large network of ATMs. Some private banks have reportedly accepted the demand for higher payment, while others are negotiating new commercial terms. So far, public sector banks have not yet agreed to renegotiate prices.
Labour costs have risen 40-50% in a year
The ATM and cash management industry is grappling with rising cost pressures. Minimum wages have been enforced in several states which has resulted in a sharp hike in the wage bill. Labour costs have gone up by 40-50% over the past year. Rising fuel prices have further pressured companies’ already low margins. The industry’s losses have also gone beyond Rs 100 crore, reports claim. Cash logistics companies are demanding compensation from banks for these losses.
Revision of fees demanded
Cash logistics companies have been demanding that their fees be revised upwards. They point out that most contracts were finalised several years ago and their prices no longer reflect current operating costs. The exact amount of fee changes will depend on the individual banks and the terms of their contracts. Unless contracts are changed, cash handling companies will find it difficult to continue services, they have said.
Number of ATMs in India
Latest Reserve Bank of India (RBI) data state that there are about 251,000 ATMs in India, which includes traditional bank ATMs, Cash Recycling Machines (CRMs), and White Label ATMs (WLAs). The total count has gone down a bit due to the popularity of digital payments. The first ATM in India was set up in 1987 by HSBC. It was opened for public use at the branch of the bank on Sahar Road in Andheri East.
