ATMs may be treated at par with bank branches

Now banks will need RBI's nod for setting up as well as closing down ATMs.

The spreading ATM culture looks set to get a hard knock with the Reserve Bank of India planning to treat them at par with bank branches.

The RBI today sent a draft circular on a branch authorisation policy to all banks. For the purpose of authorisation, the RBI said a "branch" would include a full-fledged branch, a satellite office, an extension counter as well as offsite ATMs. However, call centres have been kept out of it.

This means that banks will need the RBI's advance approval for setting up as well as closing down ATMs. So far, banks could set up ATMs on their own and keep the local RBI offices informed at the time of operationalising them.

"In a dynamic banking world, the regulator cannot expect the banks to plan their ATMs years in advance. Unlike a branch, ATMs do not create new customers. They are only a transaction platform for existing customers. Clubbing ATMs with bank branches is a retrograde step," said the CEO of a big bank who did not wish to be named.

The State Bank of India has over 7,000 ATMs "" roughly half the number of its branches. ICICI Bank has about 2,000 ATMs, four times its branch network. UTI Bank and HDFC Bank, too, have sizable number of offsite ATMs. The total number of ATMs could be 18,000 throughout the country.

Private sector banks adopted a strategy to open most offsite ATMs at strategic locations for the benefit of customers while the public sector banks had maximum ATMs at their branches, a banking analyst said.

The existing system of granting approval to open individual branches from time to time is being replaced by a system of giving aggregated approvals.

Under the revised policy, the approvals will be granted on an annual basis through a process of consultation and interaction. Branch expansion strategies and plans over the medium-term will be discussed by the RBI with banks.