100 percent FDI in white label ATMs


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

The Union Cabinet on Septembe 9, 2015 approved 100 percent Foreign Direct Investment (FDI) in white label Automated Teller Machines (WLAs). White label ATMs are those ATMs that are being set up by non-bank entities. In contrast to the earlier norm of going through the approval route, this decision by the cabinet allows foreign investments through the automatic route. However, any non-bank entity intending to set up WLAs should have a minimum net worth of 100 crore rupees as per the latest financial year's audited balance sheet, which is to be maintained at all time. Objectives The change in the policy guidelines is primarily aimed at extending the financial inclusion principal even to the Tier III to VI cities across the country. The extended reach of ATMs will allow beneficiaries of the Pradhan  Mantri Jan  Dhan  Yojana to avail a wide variety of banking services like accessing their accounts for dispensing cash and non-financial services without the need for actually visiting their bank branch. About White Label ATMs In February 14, 2012 the RBI decided to permit non-bank entities incorporated in India under the Companies Act 1956, to set up, own and operate ATMs in India. Non-bank entities that intend setting up, owning and operating ATMs, would be christened "White Label ATM Operators" (WLAO) and such ATMs would be called "White Label ATMs" (WLAs). They will provide the banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks. The WLAO's role would be confined to acquisition of transactions of all banks' customers and hence they would need to establish technical connectivity with the existing authorised shared ATM Network Operators / Card Payment Network Operators. WLA Operator (WLAO) Non-bank entities shall commence setting up and operating WLAs only after it has been authorised to do so by the RBI under the Payment and Settlement Systems Act, 2007. Taking over of ATMs operated by banks would not be permitted. Entities may ensure to draw a strategic plan for installation of such WLAs based on the criteria set during authorization. WLAO may also indicate the value added services it proposes to offer at the WLA while seeking authorisation. WLAO is permitted to have more than one Sponsor Bank. All the transactions of WLAs serviced by this Sponsor Bank would be settled through it. The Sponsor Bank should be a member of the ATM Network Operators/ Card Payment Network Operators authorised by the RBI and also be a member of the RTGS. WLAO may ensure that there are no operational constraints particularly with reference to security and customer service while considering multiple sponsor bank relationship. Cash Management at the WLAs will be the responsibility of the Sponsor Bank, who may if required, make necessary arrangements with other banks for servicing cash requirements at various places. While the cash would be owned by the WLAO, the responsibility of ensuring the quality and genuineness of cash loaded at such WLAs would be that of the Sponsor bank. At no point of time, the WLAO or his agents shall have access to the cash at the WLAs. WLAO may establish connectivity with any of the authorised ATM Network Operators/ Card Payment Network Operators and ensure that the settlement of all the transactions at the WLAs shall be done only in the books of the Sponsor Bank through the ATM Network Operators/ Card Payment Network Operators with whom the WLAO has established connectivity. Maintenance and servicing of the WLAs shall be the sole responsibility of the WLAO.

Wednesday, 16th Sep 2015, 04:12:34 AM

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