Despite a record surge in cash circulation, Indian banks are closing down ATMs and cash recyclers. This trend is a manifestation of a large-scale move towards digital payments, especially through the Unified Payments Interface (UPI), as banks adopt digital transformation strategies. The number of ATMs in India has shrunk from 219,000 in September 2023 to 215,000 in September 2024, according to recent data from the Reserve Bank of India (RBI). A steep drop in off-site ATMs, from 97,072 to 87,638, during the same period, is largely responsible for this decline.
The chairman of AGS Transact Technologies, Ravi B. Goyal, said that the changing face of banking in India requires an optimised network that combines both physical and digital infrastructures. The consolidation of public sector banks has, he said, helped in this optimisation and better service delivery in underserved areas.
While cash transactions make up 89 percent of all transactions in FY22 and account for 12 percent of India’s GDP, ATM penetration remains low at 15 ATMs per 100,000 people. RBI regulations on free ATM transactions and interchange fees have further deterred banks from investing more in ATM infrastructure, and combined with limited access, this has led to the current situation.
Industry experts say that in the future, each bank branch will have two ATMs—one on the site and the other off the site—which will be more of a global model. The objective of this approach is to balance the need for physical cash access and the increasing need for digital banking solutions.
With consumers increasingly moving to digital payment methods, banks are likely to reduce their dependence on traditional cash dispensing machines. This transition is not only in line with consumer preferences, but it also puts banks in a better position to better serve the changing needs of their customer base in a cashless society.
