RBI eases norms for setting up ATMs

23 April 2009

In a move that would allow banks to expand their ATM networks more easily, the Reserve Bank of India has allowed all scheduled commercial banks to set up offsite ATMs – or standalone ATMs outside branch premises – without prior approval of the regulator. RBI had earlier dispensed with the requirement of its permission for onsite ATMs.

Under the previous branch authorisation policy, banks needed to have a medium-term plan in respect of branch (including ATM) expansion. Lenders had to apply for a branch licence in the beginning of the financial year and secure approval for new branches depending on their assessment of the annual plan. This has now been modified.

The central bank, in its annual policy statement for 2009-10, said that the enactment of the Payment and Settlement Systems Act, 2007, had brought the systems involved in the issuance of prepaid payment instruments (such as gift vouchers and telephone calling cards) under its regulatory jurisdiction.

RBI has allowed banks which meet the eligibility criteria to issue all categories of prepaid payment instruments and the eligible non-bank entities, including non-banking finance companies, to issue semi-closed instruments.

With respect to branch authorisation policy, the RBI said, ''It is proposed to constitute a group to review the existing framework with a view to providing greater flexibility, enhanced penetration and competitive efficiency with financial stability.''

As part of its measures to make ATM usage more customer-friendly, the RBI had earlier done away with the charges on using ATMs of other banks from 1 April. The RBI had also asked banks to provide ramps at ATMs and bank branches for easy access by the handicapped. In its latest directive, the RBI has included regional rural banks in the exercise of making at least one-third of their ATMs disabled-friendly.