RBI releases the Guidelines for White Label ATMs (WLAs) in India.

 Non-bank entities intending to set up WLAs under these guidelines may approach RBI for seeking specific authorization, within four months from the date of issuance of these guidelines, beyond which the authorization seeking window will be closed.

 The guidelines for the WLA’s (White Lable ATMs), have been released on 20/06/2012.

The guidelines are addressed to The Chairman and Managing Director / Chief Executive Officers / All Scheduled Commercial Banks including RRBs /Urban Co-operative Banks / State Co-operative Banks /District Central Co-operative Banks/Authorised ATM Network Operators / Card Payment Network Operators / Prospective White Label ATM Operators.

The Draft Guidelines were issued in February 2012, and public comments were invited by Reserve Bank of India.

 On going through the public comments/interested parties and keeping in view the Draft Guidelines, the final guidelines were issued today.

Over 90,000+ ATM’s are present in India, but they are predominantly concentrated in Tier I & Teir II centres.

To encourage Indians to access the Banking network, there was a need to expand the reach of ATMs in Tier III to VI centres (classification of centres as prescribed under the Census of India 2011).

 Towards this end, RBI has been 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).

 Here are the top twelve  points of the WLAs:

 01) Interested entities should have a minimum net worth of Rs 100 crore as per the latest financial year’s audited balance sheet. This network should be maintained at all times.

02)  Like all good things in life, options have been provided to the interested companies. Companies will have three options of setting up WLAs—a minimum of 9,000 machines to be installed in three years; a minimum of 5,000 machines to be installed every year for three years, and a minimum of 25,000 machines in the first year and another 25,000 machines in the next two years.

03) As per the selected Scheme, the WLAO’s have to set up the ATM’s spread across Tier I to Tier VI cities.

04) The extant guidelines on five free transactions in a month as applicable to bank customers for using other bank ATMs would be inclusive of the transactions effected at the WLAs.

05) The WLA Operator would not be entitled to any fee from the card issuer-bank other than the “Interchange” fee payable to “acquirer” bank under the bank owned ATM scenario.

06) While the WLA operator is entitled to receive a fee from the banks for the use of ATM resources by the banks customers, WLAs are not permitted to charge bank customer directly for the use of WLAs.

07) Regulatory guidelines relating to compensation for failed transactions at bank ATMs would, mutatis mutandis, apply to the transactions effected at such WLAs. General guidelines governing the operations of the bank operated ATMs would also apply, mutatis mutandis, to WLAs.

08) Till the setup stabilizes, only banks issued cards would be permitted to be used at the WLAs to start with.

09) The Non-bank entities can 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.

10) Taking over of ATMs operated by banks is not possible.

11) 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 apart form being a RTGS Member.

12) 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. Internationally, the Cash is also loaded by WLAOs. In India, this is the responsibility of the Sponsor Bank. This was necessitated to reduce the complaints regarding fake currency notes.

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