India currently has an installed base of 240,000 ATMs. Most of these, are owned by Banks while a small number of them (~11%) are white label. And the number of ATMs is currently growing at a very modest pace. In the last 3 years, the number of ATMs has increased by a modest less than 10%.
But the last few quarters have seen the rise of micro-ATMs. Deployed largely in rural or semi-urban areas, the number of micro-ATMs has more than doubled since this data started becoming available in November-2019. As of September-2021, there were over 500,000 micro-ATMs in the country up from 235,000 micro-ATMs as of November-2019. There are thus now more than two micro-ATMs for every traditional ATM in the country.
Not surprisingly, the business model of a traditional ATM and micro-ATM is quite different. And so are the entities deploying them. Whereas the public and private sector banks have deployed the traditional ATMs, it is the newer age banks that have deployed the most micro-ATMs. And interestingly, the small finance banks, have not as yet, deployed micro-ATMs in any meaningful numbers. Fino Payments Bank has deployed the most number of micro-ATMs followed by SBM Bank. These two entities together have deployed just over 60% of micro-ATMs in the country.
And this infrastructure of micro-ATMs is being used as well. The amount of cash withdrawn through these micro-ATMs has steadily increased and in August-2021 the cash withdrawn totalled Rs268bn or 10% of the cash withdrawn through traditional ATMs.
Unlike a traditional ATM that holds cash and dispenses it, a micro-ATM does not hold cash. It is an authentication device used by the likes of banking correspondents to dispense cash. That means, unlike a traditional ATM to which customers walk up to, a micro-ATM is mobile and thus it can reach the customers to provide cash. It is thus a valuable tool to make banking more accessible in smaller towns and villages.
The ability to access one’s savings when needed increases the willingness and confidence to use the banking system as a vehicle to save money rather than put it in a chit fund or a local moneylender or buy gold or keep cash under the proverbial pillow. This should thus aid in bringing hitherto unbanked or underbanked people into the formal banking system, from a savings and not just a credit perspective.