Banks to shut down ATMs? Know why.

Why Banks Are Shutting Down ATMs – Here’s What’s Driving the Change

Written by: Supriya Kadu

Edited by: Omkar Devadkar

Last Updated: November 08, 2024

Summary: The rise of digital payments is shutting down the ATMs.

Amid the growing emphasis on digital transactions and consumer preference for UPI for ordinary payments, banks are closing more automated teller machines and cash recyclers than they are opening, even though the amount of cash in circulation is at an all-time high.

The RBI data revealed, India in September 2024 had only 215,000 ATMs, down from 219,000 in September 2023.

Off-site ATMs saw a sharp fall from a peak of 97,072 in September 2022 to 87,638 in September 2024, which is the main cause of this decline.

The publication was informed by Ravi B. Goyal, chairman of AGS Transact Technologies: "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 also added, "In recent years, public sector bank consolidation has led to more optimized networks, blending physical and digital infrastructure."

Even though cash still accounts for 89% of transactions in FY22 and 12% of GDP in India, ATM penetration is still low, with only 15 ATMs per 100,000 people.

ATM investments are less due to factors like RBI limits on interchange fees, connectivity, and free ATM transactions.

According to industry analysts, banks continue to balance digital and physical infrastructure to satisfy the changing needs of their clients. Similarly, India will follow the worldwide model of having two ATMs per branch, one on-site and one off-site.