ATM Decline: A Digital Casualty

7 Nov 2024 , 11:47 AM

Amid the growing emphasis on digital transactions and consumer preference for UPI for ordinary payments, banks are closing more automated teller machines and cash recyclers than they are opening, even though the amount of cash in circulation is at an all-time high.

According to figures from the Reserve Bank of India, there were 215,000 ATMs in India at the end of September 2024, down from 219,000 the previous year.

The majority of this decline has been in ATMs that are not housed within bank branches; as of September 2024, there were 87,638 of these machines, down from a peak of 97,072 in September 2022.

The decline in ATM usage coincides with a 100% rise in cash in circulation since demonetisation, at ₹34.70 lakh crore. In FY22, 89% of all transactions were in cash.

Twelve percent of India’s GDP in FY22 came from cash in circulation. However, according to a 2022 RBI study, there are only 15 ATMs available for 100,000 inhabitants in India, indicating that ATM penetration is still low.

This is not a profitable business because to RBI regulations that limit free ATM transactions, ATM interoperability, and the slow rise of interchange fees.

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