Dear readers,

In this article we provide you detailed information about White Label ATMs, which will help you in your studies as well as your interview preparation. Hope you like the article. 

White Label
ATMs – ATMs or Cash dispensing
machines which are set up, owned and operated by NBFCs are called White Label ATMs. They provide the banking services to the customers of banks
in India, based on the cards (debit/credit/prepaid) issued by banks. To set up and own WLAs, a non-bank entities
must have net worth of at least Rs 100 crore, which is to be maintained every
time.

Background: Earlier Banks are allowed to
set up ATMs in India. Most of the ATMs are covered up in urban areas. Although between 2008 – 2011, in Tier I and Tier II cities nearly 23-25 %
year growth in the number of ATMs are increased every year but in Tier III
& IV cities network of ATMs are very low. Thus,
RBI feels that there is a need to expand ATM network, which can be done by only
with the help of private operators.

Keeping in this view, RBI reviewed the extant
policy on ATMs and decided to permit non-bank entities incorporated in India
under the Companies Act 1956, to set up, own and operate ATMs in India. RBI
release the final guidelines on “White Label Automated Teller
Machines(WLAs) in India” on 20 June 2012. It is the other alternative to
increase financial inclusion
Initiatives in the country.

The RBI has
given permissions to 4 NBFCs and issues certificates of authorization to 3 more
NBFCs to operate WLAs. These are:

 Permission Granted:

i. Tata Communications Payment
Solutions Ltd

ii. Muthoot Finance Ltd.

iii. Prizm Payment Services

iv. Vakrangee Ltd.

Certificate of Authorization
issued to:

i. BTI Payments

ii. SREI Infrastructure Finance

iii. Riddhi Siddhi Bullions

Note: Tata Communications Payment Solutions
Limited (TCPSL), a wholly-owned subsidiary of Tata Communications Limited launched
India’s first White Label ATM under brand name “Indicash” at Chandrapada, a
rural village in Thane district, Maharashtra.

The authorisation for setting up a WLA operation under the
proposed guidelines would be initially valid for a period of one year.

A non
banking entity has to follow schemes while setting up ATMs in India:

Scheme A

i. Year -1 minimum of 1000 WLAs

ii. Year -2 minimum of twice the number of WLAs installed in
Year 1 and

iii. Year -3 minimum of three times the number of WLAs installed
in Year 2

The ratio of 3:1 would be
applicable, i.e. for every 3 WLAs installed in Tier III to VI centres, 1 WLA
can be installed in Tier I to II centres. Out of the 3 WLAs installed in Tier
III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres.

Scheme B: A minimum of 5000 WLAs every year for three years. The
ratio of 2:1 would be applicable, i.e. for every 2 WLAs installed in Tier III
to VI centres, 1 WLA can be installed in Tier I to II centres. Out of the WLAs
installed in Tier III to VI centres, a minimum of 10 % should be installed in
Tier V & VI centres.

Scheme C: A minimum of 25,000 WLAs in the first year and at least another
25,000 in the next two years. The ratio of 1:1 would be applied under
this scheme. Out of the WLAs installed in Tier III to VI centres, a minimum of
10 % should be installed in Tier V & VI centres.

Classification of Indian cities: The Reserve
Bank of India (RBI) classifies centres into 6 tiers based on population.

Tier I – Cities – Cities which have population of 100,000 and above.

Tier II – Cities which have population of 50,000 to 99,999.

Tier III – Cities which have population of 20,000 to 49,999

Tier IV – Cities which have population of 10,000 to 19,999

Tier V – Cities which have population of 5,000 to 9,999

Tier VI – Cities which have population less than 5000

Population (2001 Census) -group wise classification of centres

1. Rural
Centre – Population up to 9,999.

2. Semi-urban
centre – Population up to 10,000 to 99,999.

3. Urban
centre – Population up to 100,000 to 999,999

4. Metropolitan
centre – Population up to 1,000,000 and above.

Important
points:

1. Normal – bank ATMs has bank logo on itself but
White Label ATMs do not have such bank logo.

2. Five free transactions in a month as applicable to bank customers for using
other bank ATMs would be inclusive of the transactions effected at the WLAs.

3. While
the WLA operator is entitled to receive a fee from the banks for the use of ATM
resources by the banks customers, WLAs are not permitted to charge bank
customer directly for the use of WLAs.

4. The
cash to the WLA will be provide by Sponsor bank.

5. The
authorised non-bank entity (henceforth referred to as WLA Operator or WLAO)
would have the freedom to choose the location of the WLA.

Happy reading !