India has only 18 ATMs per 100,000 people, which is way lower than China, which is at 63 ATMs per 100,000 people, as per FIS data.
India has over 2 lakh ATMs on paper. But anybody, who wants to withdraw cash at an ATM urgently, will tell you there are only a few handful ATMs that really function all the time, while many run out of cash or are faulty . To tide over these problems, the Reserve Bank had many years ago permitted cash withdrawal at Point of Sale (PoS) by all debit cards issued in India. Banks did not listen and even the customer is not aware. So, the central bank has now directed banks to implement this facility in letter and spirit.
A PoS is a merchant establishment where you swipe cards to pay for expenses. Since PoS handle large amounts of cash transactions, they can have a PoS as cash withdrawal point as well.
An eligible PoS is supposed to allow you to withdraw cash up to Rs 1,000 per day in Tier I and II centres and up to Rs 2,000 per day in Tier III to VI centres. Customer charges, if any, on such cash withdrawals should not be more than 1% of the transaction amount. However, the concept of cash withdrawals at PoS never really took off. As a result, cardholders always have to run to the nearest functioning ATM to take out cash, where there is inevitably a long queue.
So, now RBI has nudged banks to enable the facility and seriously implement it. “It has come to our notice that the above has not been implemented in letter and spirit. The instructions issued in the above circulars are, therefore, reiterated with a view to provide for cash withdrawals at PoS by card-holders. To this end, banks may extend the facility of withdrawal of cash at any merchant establishment designated by them after a due diligence process,” RBI told banks in a notification dated August 29, 2019.
Not just a warning. The RBI has directed banks to submit data on cash withdrawals at PoS for every three months. “Banks are also advised to submit data on cash withdrawals at PoS devices to the Chief General Manager, Department of Payment and Settlement Systems….on quarterly basis within 15 days of the end of quarter as per the format enclosed to the circular dated August 27, 2015; the data shall be forwarded to the email with effect from the quarter ending September 30, 2019,” the central bank said.
Such merchant establishments also do not clearly indicate/display the availability of this facility along with the charges, if any, payable by the customer. This does not help anybody. The customer does not know that there is this facility for cash withdrawal, and hence never uses it.
Despite RBI allowing cash withdrawals at PoS, banks have been slack about the entire system. The facility was to be made available at merchant establishments designated by banks after a process of due diligence.
The facility should be ideally available irrespective of whether the cardholder makes a purchase or not. In case, the facility is availed along with the purchase of merchandise, the receipt generated has to separately indicate the amount of cash withdrawn.
Over the years, cardholders have become too reliant on bank ATMs. Today, the ATM deploying banks are in a ‘compliance’ and ‘consolidation’ mode. The increasing cost of compliance is not encouraging them to deploy more ATMs whereas India is highly deficient as far as the density of ATMs is concerned. India has only 18 ATMs per 100,000 people, which is way lower than China which is at 63 ATMs per 100,000 people, as per FIS data.
With debit card issuance growing manifold, cardholders are not finding enough ATMs, especially in the rural areas. There are only 5-11 ATMs per lakh population in the rural locations whereas there are around 40 ATMs per lakh population in the metro locations.