Tag: ATM

Bitcoin fever reaches Honduras with first cryptocurrency ATM, BFSI News, ET BFSI

Personal Finance

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The first cryptocurrency ATM in Honduras opened this week as bitcoin backers sought to spur demand for virtual assets after neighboring El Salvador became the first country to establish bitcoin as legal tender.

The machine, locally dubbed “la bitcoinera,” allows users to acquire bitcoin and ethereum using the local lempira currency and was installed in an office tower in the capital of Tegucigalpa by Honduran firm TGU Consulting Group.

Juan Mayen, 28, chief executive of TGU, led the effort to bring the ATM to Honduras in hopes of educating people about virtual assets through first-hand experience.

Until now, there was no automated way to buy crypto-currencies, he said.

“You had to do it peer-to-peer, look for someone who … was willing to do it, meet in person and carry X amount of cash, which is very inconvenient and dangerous given the environment in Honduras,” he said.

On Friday, one ethereum was trading at $3,237, and bitcoin; $48,140. If the service is popular, Mayen said he hoped to install more units.

To make a purchase, users have to scan official identification and input personal data such as a phone number.

Many software developers in Honduras are already paid in cryptocurrencies, Mayen said, adding that it will also be a cheaper option to send remittances.

In 2020, Hondurans living abroad – mainly the United States – sent $5.7 billion, about 20% of the country’s gross domestic product (GDP), in remittances.

The Congress of El Salvador approved in June a proposal by President Nayib Bukele to make the country the first in the world to adopt Bitcoin as legal tender.

Elsewhere in the region, lawmakers presented draft bills in Panama that regulate the use of bitcoin and its status as a legal tender.



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Bitcoin fever reaches Honduras with first cryptocurrency ATM, BFSI News, ET BFSI

Personal Finance

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The first cryptocurrency ATM in Honduras opened this week as bitcoin backers sought to spur demand for virtual assets after neighboring El Salvador became the first country to establish bitcoin as legal tender.

The machine, locally dubbed “la bitcoinera,” allows users to acquire bitcoin and ethereum using the local lempira currency and was installed in an office tower in the capital of Tegucigalpa by Honduran firm TGU Consulting Group.

Juan Mayen, 28, chief executive of TGU, led the effort to bring the ATM to Honduras in hopes of educating people about virtual assets through first-hand experience.

Until now, there was no automated way to buy crypto-currencies, he said.

“You had to do it peer-to-peer, look for someone who … was willing to do it, meet in person and carry X amount of cash, which is very inconvenient and dangerous given the environment in Honduras,” he said.

On Friday, one ethereum was trading at $3,237, and bitcoin; $48,140. If the service is popular, Mayen said he hoped to install more units.

To make a purchase, users have to scan official identification and input personal data such as a phone number.

Many software developers in Honduras are already paid in cryptocurrencies, Mayen said, adding that it will also be a cheaper option to send remittances.

In 2020, Hondurans living abroad – mainly the United States – sent $5.7 billion, about 20% of the country’s gross domestic product (GDP), in remittances.

The Congress of El Salvador approved in June a proposal by President Nayib Bukele to make the country the first in the world to adopt Bitcoin as legal tender.

Elsewhere in the region, lawmakers presented draft bills in Panama that regulate the use of bitcoin and its status as a legal tender.

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PNB earns Rs 170 crore in FY21 by levying charges on non-maintenance of minimum balance, BFSI News, ET BFSI

Banking & Finance

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State-owned Punjab National Bank (PNB) collected nearly Rs 170 crore by levying charges on customers for not maintaining the required minimum balance in their accounts during 2020-21, according to RTI information. The lender’s revenue earned from such charges stood at Rs 286.24 crore in 2019-20.

Banks levy such charges on a quarterly basis during a fiscal year.

The quarterly average balance (QAB) in the April-June period of 2020-21 stood at Rs 35.46 crore (both on savings and current account); while no such charges were levied in the second quarter of FY21.

In the third and fourth quarters, the QAB non-maintenance charges stood at Rs 48.11 crore and Rs 86.11 crore, respectively, PNB said in a reply to Right to Information (RTI) sought by Madhya Pradesh-based social activist Chandra Shekhar Gaur.

Also, the lender earned Rs 74.28 crore in the form of ATM transaction charges during the year. In the preceding 2019-20, it was Rs 114.08 crore.

The bank said it waived the ATM transaction charges during the first quarter of 2020-21 vide an IBA letter and government guidelines.

In response to a query on the number of operative and inoperative accounts, the lender said 4,27,59,597 accounts were dormant as of June 30, 2021, while a total of 13,37,48,857 accounts were operative.



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Banks may slow ATM expansion, encourage online transactions, BFSI News, ET BFSI

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The new Reserve Bank of India rule to penalise banks Rs 10,000 for each instance of an ATM out of cash for 10 hours has an unintended fallout in the form of banks slowing down the rollout of ATMs.

According to experts, banks may rely on other banks ATMs if there are more restrictions rather than setting up new ones. With digital channels picking up banks would go slow on ATMs.

The directive may cost banks Rs 125-200 crore, according to estimates by ATM operators and cash logistics companies.

In a circular to banks, the RBI said that they should monitor the availability of cash in ATMs and ensure that there are no cash-outs. The circular said that banks would be fined Rs 10,000 if there is a cash-out at any ATM for more than 10 hours in a month.

The issue

There are 2,13,766 ATMs in the country, and most of them are managed by MSPs who appoint cash-in-transit companies to replenish the currency notes in the machines.

An ATM typically goes out of cash six times every month and nearly 50% of the ATMs face this issue. The biggest hit will be to State Bank of India which has about 64,000 ATMs.

However, there are certain locations where ATMs run out of cash within hours of being loaded. These machines may not become feasible to operate if there is a penalty every month.

The reaction

There is a mixed reaction to the move by the RBI to penalise banks Rs 10,000 for each instance of an ATM being out of cash for 10 hours. ATM operators (known in the industry as managed service providers, or MSPs) and cash-in-transit companies are throwing up their hands, stating that they will not bear the penalty.

However, it is quite likely that the banks may pass the penalty to MSPs, which will in turn pass it on to cash logistics agencies.

Experts stress the need to address the root causes of ATMs running dry, such as sub-optimal cash forecasting and delays in the availability of ATM-fit currency.

The RBI circular

Already banks are struggling to meet the 2018 RBI circular that requires banks to put in place stringent measures such as transporting cash in cassettes, in prescribed vehicles sticking to government norms on the transport of currency during specified hours of the day. According to banks, it is difficult to implement all these norms under present cost structures.



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ATM companies wary of RBI’s Rs 10,000 cash-out fine, BFSI News, ET BFSI

Banking & Finance

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There is a mixed reaction to the move by the Reserve Bank of India (RBI) to penalise banks Rs 10,000 for each instance of an ATM being out of cash for 10 hours. ATM operators (known in the industry as managed service providers, or MSPs) and cash-in-transit companies are throwing up their hands, stating that they will not bear the penalty.

In a circular to banks this week, the RBI said that they should monitor the availability of cash in ATMs and ensure that there are no cash-outs. The circular said that banks would be fined Rs 10,000 if there is a cash-out at any ATM for more than 10 hours in a month.

“There are certain locations where ATMs run out of cash within hours of being loaded. These machines may not become feasible to operate if there is a penalty every month,” said a senior executive in an MSP firm. There are 2,13,766 ATMs in the country, and most of them are managed by MSPs who appoint cash-in-transit companies to replenish the currency notes in the machines.

According to MSPs, the regulations are well-intentioned as they recognise the role of cash in the economy and put the onus on banks to ensure cash availability. However, they say that the penalty is not well thought out because banks outsource most of the work and treat the regulations as something to be passed through to the MSPs.

“While the intent behind this RBI circular is welcome, penalty approach alone is unlikely to resolve the issue of ATM currency outage. In fact, it is quite likely that this penalty will become a pass-through, from banks to MSPs, and from MSPs to cash logistics agencies,” said Rituraj Sinha, group managing director at SIS, the largest security and cash-in-transit company in India.

According to Sinha, what needs to be addressed is the root causes of ATMs running dry, such as sub-optimal cash forecasting and delays in availability of ATM-fit currency.

“On-ground implementation of the RBI circular dated April 2018 is the real solution, not just before better security but also more accurate cash forecasting and on-time availability of currency to enable cash logistics agencies to upload ATMs on time and with an adequate amount of currency,” he said.

The 2018 circular requires banks to put in place stringent measures such as transporting cash in cassettes, in prescribed vehicles sticking to government norms on the transport of currency during specified hours of the day.

According to banks, it is difficult to implement all these norms under present cost structures.



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ATM companies wary of RBI’s Rs 10,000 cash-out fine, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: There is a mixed reaction to the move by the Reserve Bank of India (RBI) to penalise banks Rs 10,000 for each instance of an ATM being out of cash for 10 hours. ATM operators (known in the industry as managed service providers, or MSPs) and cash-in-transit companies are throwing up their hands, stating that they will not bear the penalty.

In a circular to banks this week, the RBI said that they should monitor the availability of cash in ATMs and ensure that there are no cash-outs. The circular said that banks would be fined Rs 10,000 if there is a cash-out at any ATM for more than 10 hours in a month.

“There are certain locations where ATMs run out of cash within hours of being loaded. These machines may not become feasible to operate if there is a penalty every month,” said a senior executive in an MSP firm. There are 2,13,766 ATMs in the country, and most of them are managed by MSPs who appoint cash-in-transit companies to replenish the currency notes in the machines.

According to MSPs, the regulations are well-intentioned as they recognise the role of cash in the economy and put the onus on banks to ensure cash availability. However, they say that the penalty is not well thought out because banks outsource most of the work and treat the regulations as something to be passed through to the MSPs.

“While the intent behind this RBI circular is welcome, penalty approach alone is unlikely to resolve the issue of ATM currency outage. In fact, it is quite likely that this penalty will become a pass-through, from banks to MSPs, and from MSPs to cash logistics agencies,” said Rituraj Sinha, group managing director at SIS, the largest security and cash-in-transit company in India.

According to Sinha, what needs to be addressed is the root causes of ATMs running dry, such as sub-optimal cash forecasting and delays in availability of ATM-fit currency.

“On-ground implementation of the RBI circular dated April 2018 is the real solution, not just before better security but also more accurate cash forecasting and on-time availability of currency to enable cash logistics agencies to upload ATMs on time and with an adequate amount of currency,” he said.

The 2018 circular requires banks to put in place stringent measures such as transporting cash in cassettes, in prescribed vehicles sticking to government norms on the transport of currency during specified hours of the day.

According to banks, it is difficult to implement all these norms under present cost structures.



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No cash in ATM? Banks to face penalty from October 1, BFSI News, ET BFSI

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Concerned over the inconvenience caused to the public due to the non-availability of cash in ATMs, the Reserve Bank has decided to penalise banks for failure to timely replenish currency notes in such machines.

The RBI will start imposing penalty on banks in case the ATMs remain out-of-cash for a total period of 10 hours in a month from October 1, 2021, onwards.

The scheme

“The Scheme of Penalty for non-replenishment of ATMs has been formulated to ensure that sufficient cash is available to the public through ATMs,” the RBI said in a circular.

The Reserve Bank of India has a mandate to issue banknotes and the banks are fulfilling this mandate by dispensing banknotes to the public through their wide network of branches and ATMs.

In this connection, it said a review of downtime of ATMs due to cash-outs was undertaken and it was observed that ATM operations affected by cash-outs lead to non-availability of cash and cause avoidable inconvenience to the members of the public.

It has, therefore, been decided that the banks/ White Label ATM Operators (WLAOs) will strengthen their systems/ mechanisms to monitor the availability of cash in ATMs and ensure timely replenishment to avoid cash-outs, the central bank said.

“Any non-compliance in this regard shall be viewed seriously and shall attract monetary penalty as stipulated in the ‘Scheme of Penalty for non-replenishment of ATMs’,” the RBI said.

The Scheme will be effective from October 01, 2021.

How will it work?

On condition for counting instances of cash-outs in an ATM, the RBI said it would come into play “when the customer is not able to withdraw cash due to non-availability of cash in a particular ATM”.

As regards the quantum of penalty, the central bank said “cash-out at any ATM of more than ten hours in a month” will attract a flat penalty of Rs 10,000 per ATM.

In the case of White Label ATMs (WLAs), the penalty would be charged to the bank, which is meeting the cash requirement of that particular WLA.

The bank, may, at its discretion, recover the penalty from the WLA operator, it added.

At the end-June 2021, there were 2,13,766 ATMs of different banks in the country.



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Strengthen systems to monitor availability of cash, RBI to banks, White Label ATM operators

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The Reserve Bank of India has asked banks and White Label ATM Operators (WLAOs) to strengthen their systems to monitor availability of cash in ATMs and ensure timely replenishment to avoid cash-outs, failing which monetary penalty will be imposed on them.

‘Scheme of penalty’

In this regard, RBI has come out with a “Scheme of Penalty for non-replenishment of ATMs”, which will be effective from October 1, 2021. Cash-out (when the customer is not able to withdraw cash due to non-availability of cash in a particular ATM) at any ATM of more than ten hours in a month will attract a flat penalty of ₹10,000 per ATM.

In case of White Label ATMs (WLAs), the penalty would be charged to the bank which is meeting the cash requirement of that particular WLA. The bank may, at its discretion, recover the penalty from the WLA operator.

The scheme has been formulated following a review of downtime of ATMs due to cash-outs. RBI said it was observed that ATM operations affected by cash-outs lead to non-availability of cash and cause avoidable inconvenience to the members of the public. RBI said, Banks have to submit system generated statement on downtime of ATMs due to non-replenishment of cash to the Issue Department of RBI under whose jurisdiction these ATMs are located.

In the case of WLAOs, the banks which are meeting their cash requirement will furnish a separate statement on behalf of WLAOs on cash-out of such ATMs due to non-replenishment of cash.

As the intention of the Scheme is to ensure replenishment of ATMs in time, RBI said appeals would be considered only in cases of genuine reasons beyond the control of bank/ WLAOs such as, imposition of lockdown by the State/ Administrative authorities, strike, etc.

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No sense in charging for ATM transactions, BFSI News, ET BFSI

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Banks are making it expensive for customers to handle cash. They want to charge fees for automated teller machine (ATM) transactions, fees for cash transactions —lower at home branches and higher at others. In this, banks are acting in an unprincipled fashion and probably will end up harming themselves, diverting custom to fintech companies or mobile companies that also have payment bank licences and hundreds of thousands of outlets where customers can do banking transactions that entail cash.

Writing in ET’s online edition, former central banker G Sreekumar makes the point that banks actually save money when customers use ATMs instead of walking up to a branch and using up a teller’s time. Using up expensive real estate and staff time for people to queue up to inquire about their bank balance or make a simple withdrawal makes little sense, apart from disrespecting the customer.

The reason why a savings bank account offers arate of interest lower than what a fixed deposit does is that the customer has the right to withdraw money anytime, without notice. A current account offers no interest for the same reason. This right is being infringed by putting limits on how many withdrawals can be made for free. Use of ATMs allows people to exercise their right at minimal cost to banks. Sreekumar cites a study of the late 1990s that put the cost of a customer using ATMs to be a tenth of the cost of the customer using a branch facility instead.

Another reason to encourage, rather than discourage, ATM use is it allows sharing of costs, say, in rural areas. Instead of multiple banks opening multiple branches, they can share an ATM, white label or otherwise. Fortunately, customers are in a position to fight back.

They can simply open up or operationalise a payment bank account with a mobile phone operator, transfer the bulk of the funds in their accounts with their banks to the payment bank, earn a decent rate of interest and withdraw cash as they like. In the meantime, let banks rid their epayments of glitches.



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ATM usage to cost more

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The Reserve Bank of India (RBI) has accepted the long-standing demand of banks and White Label ATM operators (WLAO) for a hike in interchange fee in view of increasing cost of ATM deployment and maintenance.

This could encourage deployment of ATMs, which has hit the slow lane in the last one year amid the Covid-19 pandemic.

The interchange fee (which is recovered by banks owning ATMs from card issuing banks for providing) has been upped from ₹15 to ₹17 per financial transaction and from ₹5 to ₹6 per non-financial transaction in all centres. The new fee will be effective from August 1.

Customer charges

Simultaneously, to compensate Banks for the higher interchange fee and given the general escalation in costs, they have been allowed to increase the customer charges for transactions beyond the stipulated free monthly ATM transactions to ₹21 per transaction from ₹20. This increase will be effective from January 1, 2022.

Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. In other bank ATMs they are allowed three transactions in metro centres and five in non-metro centres.

RBI, in a circular, said applicable taxes, if any, will be additionally payable on the interchange fee and customer charges. The central bank added that its instructions also apply, mutatis mutandis (with the necessary changes having been made), to transactions done at Cash Recycler Machines (other than for cash deposit transactions).

ATM additions declined to 2,815 in FY21 against 8,564 in the previous year. The number of ATMs across the country is 2.13 lakh (2.10 lakh.)

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