RBI has asked banks to recalibrate ATMs by June 2019, but banks are facing a host of problems and have asked finance ministry to intervene.
New Delhi: The government and the Reserve Bank of India (RBI) could be set for another standoff, this time over the issue of granting more time to banks for ATM upgradation.
In June, the RBI had issued a circular asking banks to upgrade their ATMs to reduce instances of fraud. The central bank had directed banks to take up the exercise in a phased manner, completing it by June 2019.
According to sources, the issue is expected to come up at the next RBI board meeting on 14 December.
Banks are worried about the operation of ATMs, and are set to raise this issue with the finance ministry, seeking its intervention with the RBI.
The government is equally worried about the possible shut down of about 50 per cent ATMs, especially with the Lok Sabha polls approaching.
“It is an election year, this can become a huge issue, more so because people had to go through huge pains for months during demonetisation. Going through it all over again will have severe ramifications,” a senior government official told ThePrint on the condition of anonymity.
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Why banks are worried
Banks say not only is the upgradation exercise a costly one, it will take a lot of time too, because there’s a dearth of specialised engineers who can upgrade and calibrate the ATMs. The calibration of a single ATM costs between Rs 1,500 and Rs 2,000.
It’s not as though banks are in the pink of health — the sector has faced a tough few years, with mounting non-performing assets thinning profits. Besides, banks had to take a substantial hit in recalibrating the country’s 2.2 lakh ATMs just two years ago when the government withdrew high-value currency notes in a single stroke.
“We have adopted a wait-and-watch approach at this point. We are only hoping that the deadline to complete the exercise is extended,” a senior executive at a large private sector bank said.
Bankers added that besides incorporating upgraded security features, the exercise would require ATMs’ cassettes or boxes containing currency notes of Rs 100, Rs 500 and Rs 2,000 to be replenished with fresh cash at bank branches.
ATM have four cassettes or boxes, dispensing currency notes of Rs 100, Rs 500 and Rs 2,000. While banks have initiated the exercise of ATM recalibration for dispensation of Rs 200 currency notes, over 50 per cent of the ATMs are yet to be recalibrated for these notes.
“This would mean that for urban areas, ATMs would need an additional set of cassettes to ensure cash dispensation is not interrupted. This will incur huge costs,” the executive said.
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Completely agree, why does RBI does not standardise notes ?
RBI COEXIST WITH GOVT. WHY SOME TAKE MUCH TIME AND DISCUSS THE SUBJECT REPEATEDLY AND ACCUSING EACH.
FOR CONVENIENCE AND EFFECTIVE ADMN THEY WILL MEET FREQUENTLY. IT IS BETTER TO AVOID PRESUMPTIVE CREATION OF NOVELS.
The RBI could become part of the solution by standardising the size of different denominations of currency notes, avoiding the need to recalibration ATMseach time a new note is issued. 2. The banking industry is hemorrhaging. The central bank needs to show greater consideration to its genuine difficulties and constraints.