DNA Edit – Think before you act: Halving ATMs will impact financial services

Come March 2019 and banking may no longer be at a customer’s proverbial finger tips. Half of India’s Any Time Money (ATM) machines, numbering a total of 238,000, may close down. Reason: regulatory guidelines for safer transport and storage of cash to ATMs will make the business more expensive. The number of ATMs have remained static for the last two years or so. With the government’s attempts to encourage customers to use internet banking, which helps the cause of transparency as well as lowers operational costs, the move has been taken with an eye on the future. But there are two sides to the picture here. One is the Modi government’s efforts to bring in more transparency in financial dealings, even if it involves mere withdrawal of money. But there is also the flip side, whose implications are more wide ranging. Are the people prepared? Is the vast multitude, hundreds of millions who are illiterate and unread, prepared for internet banking, which the government justifiably wants to encourage, but which should not be forced down people’s throat with a hammer. It is one thing to nudge the population, it is quite another to push it. And that is exactly what is going to happen if ATMs are halved. It would be instructive to remember that ATMs are a crucial piece of financial infrastructure.

Thus far, the vast population has, with some effort, gotten accustomed to its operations. Now, if the whole system is suddenly disturbed, then a number of people would be seriously handicapped. There can be no doubt that the reduction of ATMs will hit delivery of financial services. No one has the right to stop access to one’s money. That is the bottom line. Importantly, it is not for the banks to decide on such important matters. It is for the finance ministry and the RBI to take a call on issues, which involves the good of the common public. Which is why the apex body, Confederation of ATM industry, has warned of a two-fold handicap; it will imperil thousands of jobs and impact the government’s financial inclusion plan. There is a serious case of government rethink. The origin of the trouble go back to the revised guidelines in the movement and storage of cash, issued by the Ministry of Home Affairs. These guidelines insist on tighter security norms for cash movement. These include hardware and software upgrades, new cash management standards and the cassette swap method of loading cash. There would be two gunmen instead of one, the cash van would need a camera and other infrastructural improvements. In other words, the ATMs would become unviable unless service charges are hiked up. ATM service providers have already warned that they would be financially constrained to comply with these guidelines. It makes sense for the government, therefore to re-examine its policy and adopt a route that is best for the people.