Average withdrawal rises 75 per cent over last year
Rising incomes and the growing acceptance of automatic teller machines (ATMs) has begun to show in the size of cash withdrawals. In the recent festival season, the average ATM cash withdrawal was Rs 10,500, thrice of Rs 3,500 in 2008 and up 75 per cent from Rs 6,000 in 2009, according to Euronet Worldwide, a provider of electronic financial transaction solutions.
There has been a sharp rise in the number of ATMs in the country in the last few years. Banks cut down their transaction costs with ATMs.
Indians spend the most during the festival season which starts with Onam in Kerala, moves to the East in Dusshera and ends with Diwali in the North. Farmers harvest their crops and sell the produce during these days, while the salaried class gets bonus.
The sharp rise in cash withdrawal from ATM shows that consumer confidence is back, fears of joblessness have subsided and people are confident of earning more in the days to come. Some observers said this was a clear result of the country growing at 8.5 per cent this year. The extra money spent during the festival season is not on staples but on discretionary items like automobiles, consumer electronics, clothes etc.
It also reflects the obsession for cash with Indians, which is apparent from the rise in the use of ATMs, said Euronet India Managing Director Sunil Nair. The analysis of Euronet is based on data of 14 banks which are part of Cashnet, India’s largest multilateral private network for inter-bank ATM transactions. The number of ATMs under this system has risen to 15,000 from 9,099 in October 2008. Both the number of transactions and average values per machine are rising.
“There is tremendous surge in consumption and rise in purchasing power and propensity to spend,” said Bank of Baroda Chief Economist & General Manager Rupa Rege-Nitsure “This also shows India’s transition from a developing economy to a middle-income nation. The rise has happened in certain income brackets, especially among the middle and higher-middle classes.”
Still, the rise could also be attributed to accelerating inflation, said C S Jain, the head for personal banking at IDBI Bank. Also, there is a ceiling of five transactions that are free of charge for withdrawing cash from other banks' ATM. This may also have contributed to increase in average transaction size, said Jain. Most of the rise in use of ATMs has been in major metropolitan cities, according to Euronet. Maharashtra leads the maximum successful transactions followed by Delhi, Karnataka & Tamil Nadu, indicating that consumers in Maharashtra and Delhi carry more cash than from any other state in India.
