If these ATMs are shut, 33.24 crore beneficiaries of the PMJDY scheme would be affected as they rely on ATMs to withdraw subsidies
The potential shut down of nearly 1.13 lakh bank ATMs in March 2019 could hurt Prime Minister Narendra Modi's flagship scheme Jan Dhan Yojana.
The Confederation of ATM Industry (CATMi) on November 21 announced that nearly half of the 2.38 lakh installed ATMs in India may be shut down as operations are unviable.
"If this happens, the financial inclusion programme would be severely impacted as millions of beneficiaries under the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, who withdraw subsidies in form of cash through ATMs, may find their neighbourhood ATM shut," CATMi said in a statement.
The shutting down of ATMs is a result of Reserve Bank of India's (RBI's) recent regulatory guidelines for ATM hardware and software upgrades, cash management standards, and cash loading methods.
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In April, the RBI had mandated a minimum net worth of Rs 100 crore for service providers and their sub-contractors handling cash management logistics on behalf of banks. It also directed cash vans transporting money to have CCTV, GPS connectivity, tubeless tyres, hooters, and wireless communication systems.
These additional compliance requirements call for a huge cost outlay. Thus, the service providers who do not have the financial means to meet such massive costs may be forced to shut down these ATMs, unless banks step in to bear the load of the additional cost of compliances.
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CATMi said its members, which include the ATM -managed service providers (MSPs), brown-label ATM deployers (BLAs) and White Label ATM (WLAs) operators, are already reeling under the financial impact caused by huge losses during and post-demonetisation as cash supply was impacted and remained inconsistent for months.
If these ATMs are shut, 33.24 crore beneficiaries of the PMJDY scheme would be affected as they rely on ATMs to withdraw subsidies. The beneficiaries (19.67 crore) at rural and semi-urban may be affected the most as the cost to maintain additional compliance would be higher at far-off places.
Under the scheme, people across the country deposited Rs 84,237 crore in Jan Dhan accounts, as of November 14, 2018.
The scheme may take a hit as around 68 percent of the population lives in rural areas, where lack of physical and digital connectivity is already posing a major hurdle in achieving financial inclusion for rural India.
Jan Dhan Yojana was launched in 2014 to ensure that people from weaker sections of the society and low-income groups get access to basic financial services like a savings account, insurance, and pension. Beneficiaries of the scheme are also eligible to get a RuPay debit card; there are currently about 26.14 crore such cardholders.
In September, the government relaunched PMJDY as an open-ended scheme with higher insurance cover and double the overdraft (OD) facility. With this, the government aims to take the formal banking system from "every household to every adult".
