UPI, RBI rules …: Why Banks are shutting down ATMs – ET BFSI

Despite a record-high cash circulation, India’s banks are reportedly increasingly phasing out ATMs and cash recyclers. According to a report in Economic Times, this shift is driven by the growing popularity of digital payments, particularly UPI, and a strategic focus on digital transformation.

According to RBI data, the number of ATMs in India decreased from 219,000 in September 2023 to 215,000 in September 2024. This decline is primarily due to a significant reduction in off-site ATMs, which fell from a peak of 97,072 in September 2022 to 87,638 in September 2024.

Ravi B Goyal, chairman of AGS Transact Technologies, told the publication, “The recent trends in ATM deployment reflect a shifting focus in India’s banking sector as it navigates the dynamic landscape of consolidation, digital transformation and expansion into underserved regions.” He added, “In recent years, public sector bank consolidation has led to more optimised networks, blending physical and digital infrastructure.”

RBI mandate for ATMs

While cash still plays a significant role in India’s economy, accounting for 89% of transactions in FY22 and 12% of GDP, ATM penetration remains low with only 15 ATMs per 100,000 people. Factors such as RBI regulations on free ATM transactions, interoperability, and interchange fees have further discouraged ATM investments.

Industry experts predict that India will adopt a global model of two ATMs per branch, one on-site and one off-site, as banks continue to balance physical and digital infrastructure to meet the evolving needs of their customers.