Priyanka Parashar/Mint
Priyanka Parashar/Mint

De-jargoned: White label ATMs

These are ATMs that are mandated to be set up by NBFCs and will not have any bank branding

First it was Tata Communications Payment Solutions Ltd (TCPS), a wholly-owned subsidiary of Tata Communications Ltd, which in June 2013 set up white label automated teller machines (ATMs), or WLAs, now Muthoot Finance Ltd, a gold financing company has announced that it plans to set up 250 such ATMs in the next three months. Ever since the announcement of WLA licence was made by the Reserve Bank of India (RBI) in February 2012, 13 non-banking finance companies (NBFCs) have been given in-principle approval to set up WLAs. Until now, only TCPS has started operations and aims to set up 15,000 ATMs in the next three years; Muthoot Finance is expected to follow.

What are these?

These are ATMs that are mandated to be set up by NBFCs and will not have any bank branding. Similar to other ATMs, these ATMs can be used by any domestic debit card holder to withdraw cash, make a balance inquiry, change the personal identification number or ask for mini statements. All guidelines applicable to other bank-reported ATMs will also be applicable to WLAs.

Costs: As per RBI guidelines, the costs associated with transactions at WLAs are the same as that charged by normal bank ATMs; so here, too, in a month, the first five transactions are free of cost. These charges will appear on the screen at the time of transaction.

How do they operate?

As per RBI rules, these require a sponsor bank, which will be responsible for settlement of transactions and management of cash at these ATMs. But maintenance and other servicing related issues will be handled by WLA operators. Banks, in turn, are allowed to sign agreements with other banks in locations where they are not present.

Also, WLA operators need to have a fixed ratio of rural and urban WLAs as prescribed by RBI.

In case of failed transaction disputes, though the card issuer bank will be primarily responsible to resolve the issue, the sponsor bank along with the WLA operator will have to provide all necessary information.

Current state

The initiative was taken to increase the penetration of ATMs in India, especially rural areas, where though the rate of growth of new ATMs is around 30%, the ATM count per million population is roughly 74 compared with at least 200 for China and 1,300 for the US. However, though licences have been issued to various entities, not much has happened on the ground yet.