White Label ATMs (WLAs)
Automated Teller Machines (ATMs) set up, owned and operated by non-bank entities are called "White Label ATMs" (WLAs). They provide the banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks.
Non-bank entities that set up, own and operate ATMs are called "White Label ATM Operators" (WLAO). The WLAO's role is confined to acquisition of transactions of all banks' customers by establishing technical connectivity with the existing authorized, shared ATM Network Operators / Card Payment Network Operators.
Tata Communications Payment Solutions Limited (TCPSL) is the first company authorized by Reserve Bank of India (RBI) to open White Label ATMs in the country. It got launched under the brand name 'Indicash' on 27 June 2013. As on 31.2.2015, 11706 WLAs have been set up in India. (Source: Press Release of Ministry of Finance dated 8 March 2016)
Background and Objectives
Automated Teller Machines (ATMs) provide the facility of accessing depositor’s accounts for dispensing cash and to carry out other financial and non-financial transactions without the need for actually visiting their bank branch. ATMs have expanded the scope of banking to anytime, anywhere banking through interoperable platforms. Cards issued by one bank can be operated through the ATMs set up by other banks.
Prior to WLAs only banks were permitted by the Reserve Bank of India (RBI), to set up ATMs. However, ATMs have become the means for financial inclusion and have been leveraged for delivery of a wide variety of banking services to customers. While, there has been around 23-25% year-on-year growth in the number of ATMs, their deployment has been predominantly in Tier I & II centers. To expand the reach of ATMs in Tier III to VI centers, non-banks entities were also allowed to set up ATMs since 20 June 2012.
Non-bank entities incorporated in India under the Companies Act 1956 are allowed to operate WLAs. In September 2015, Government permitted Foreign Direct Investment (FDI), up to 100%, under the automatic route. Before that, foreign investment in White Label ATMs, was being allowed only through government approval route.
Non-bank entities are permitted to set up WLAs in India, after obtaining authorisation from RBI under the Payment and Settlement Systems (PSS) Act 2007. Such non-bank entities should have a minimum net worth of Rs 100 crore as per the latest financial year’s audited balance sheet, which is to be maintained at all times.
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. Acceptance of deposits at the WLAs is not permitted. But the WLAO are permitted to display advertisements and offer value added services as per the regulations in force from time to time.
Cash Management at the WLAs is the responsibility of the Sponsor Bank, who may if required, make necessary arrangements with other banks for servicing cash requirements at various places. WLAO is permitted to have more than one Sponsor Bank. 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 have access to the cash at the WLAs.
Taking over of ATMs operated by banks is also not permitted. Based on the number of WLAs installed in the initial years, either a 3:1 or 2:1 or 1:1 ratio is prescribed for setting up WLAs in Tier III to VI centres, as against each WLA installed in Tier I to II centres.
The primary responsibility to redress grievances of customers relating to failed transactions at WLAs vest with the Issuing Bank. However, the Sponsor Bank will provide necessary support in this regard, ensuring that the WLAO makes available relevant records and information to the Issuing Bank. For this purpose, the Sponsor Bank should have necessary arrangement with the WLAO.
The extant directives of the RBI on the time-lines for resolution of complaints of failed ATM transactions at bank operated ATMs would also apply to transactions at the WLAs. For delay in resolution of such complaints attributable to the Sponsor Bank or the WLAO resulting in payment of penalty to the customer by the Issuing Bank in terms of the directives of RBI, the Issuing Bank shall be compensated by the Sponsor Bank. The Sponsor Bank may have appropriate agreements with the WLA Operator for recovery of such amounts.