ATM operators raise concerns about Rs 10,000 penalty in case of cash-out

ATM operators, also known as managed service providers, have raised concerns about the Reserve Bank of India’s latest move to impose a penalty of Rs 10,000 for each instance of an ATM being out of cash for 10 hours. The RBI, in a circular, said banks would be fined Rs 10,000 if there is a cash-out at any ATM for more than 10 hours in a month.

There are 2,13,766 ATMs in the country, and most of them are managed by MSPs who appoint cash-in transit companies to replenish the currency notes in the machines. “A review of downtime of ATMs due to cash-outs was undertaken and it was observed that ATM operations affected by cash-outs lead to non-availability of cash and cause avoidable inconvenience to the members of the public,” RBI said in a statement. “Therefore, been decided that the banks/White Label ATM Operators shall strengthen their systems and mechanisms to monitor availability of cash in ATMs and ensure timely replenishment to avoid cash-outs. Any non-compliance in this regard shall be viewed seriously and shall attract monetary penalty.”

As such, the central bank said a penalty of Rs 10,000 per ATM will be levied in the event of a cash-out situation for more than 10 hours in a month. “In case of white label ATMs, the penalty would be charged to the bank which is meeting the cash requirement of that particular white label ATM. The bank, may, at its discretion, recover the penalty from the white label ATM operator.” The banks shall submit a system a system-generated statement on downtime of ATMs due to non-replenishment of cash to the Issue Department of RBI under whose jurisdiction these ATMs are locked.

The RBI highlighted that the intention of the scheme is to ensure replenishment of ATMs in time, appeals would be considered only in cases of genuine reasons beyond the control of bank/WLAO such as, imposition of lockdown by the state/administrative authorities, strike etc.

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A senior executive in an MSP firm told ToI that there are certain locations where ATMs run out of cash within hours of being loaded. “These machines may not become feasible to operate if there is a penalty every month. Rituraj Sinha, group managing director, SIS, the largest security and cash-in transit company in India, welcomed the intent behind this RBI circular is welcome, but said the penalty approach alone is unlikely to resolve the issue of ATM currency outage. “In fact, it is quite likely that this penalty will become a pass-through, from banks to MSPs and from MSPs to cash logistics agencies.”

Sinha believes the root causes of ATMs running dry, such as sub-optimal cash forecasting and delays in availability of ATM-fit currency, should be addressed. “On-ground implementation of the RBI circular dated April 2018 is the real solution, not just before better security but also more accurate cash forecasting and on-time availability of currency to enable cash logistics agencies to upload ATMs on time and with an adequate amount of currency,” he said.