In a move to boost network of cash dispensing machines to the remotest of areas in the country, the Union Cabinet has cleared the proposal to allow 100 per cent foreign direct investment (FDI) in white labelled ATMs on Wednesday.
White labelled ATMs are not owned or run by any bank but allows users of any bank to transaction like a regular machine.
The move will allow foreign non-bank entities to set up or acquires ATMs across the country under the automatic approval route.
It would be akin to independent telecom tower operators buying and running tower infrastructure previously owned by telecom operators themselves.
According to RBI guidelines, white labelled ATMs set up by non-bank entities would provide banking services to customers, based on cards issued by banks. The RBI had issued guidelines for setting up white labelled ATMs in 2012 while the central bank gave permission to Indian operators to set up their ATMs a year later.
Indicash was the first white label ATM started by Tata Communications Payment Solutions Limited (TCPSL) following which AGS Transact, Srei Infrastructure, Muthoot Finance set up their ATMs across the country.
Figures released by RBI in May indicate that there are over 1.83 lakh ATMs operated by 54 public, private and foreign banks in the country. With RBI granting bank licence to two more entities and allowing 100 per cent FDI in white labelled
ATMs, the number is expected to soar in the coming months.
Indian government has been working towards relaxing norms in FDI policy since it came to power more than a year ago to boost foreign investment in the country. While the move is aimed at increasing penetration of banking in rural areas, entities may move more towards urban base due to higher usage statistics.