Transactions at ATMs fall 9% in November | 2014-12-08

Transactions at ATMs fall 9% in November

8th December, 2014 07:47:32 printer

Transactions at ATMs fall 9% in November

CHENNAI: Higher withdrawals for Diwali coupled with banks limiting free ATM withdrawals led to a drop in the number of ATM transactions across the country. Transactions dropped 9% from 26.8 crore in October 2014 to 24.4 crore in November, data from National Payments Corporation of India (NPCI) showed. The NPCI is an umbrella institution of all retail payments in the country and operates the NFS (national financial switch) of most ATM networks across the country.

"The RBI directives on limiting ATM transactions, along with higher withdrawals during October-end on account of Diwali, has resulted in lower ATM transactions during November," a senior official from NPCI said. Beginning November, banks imposed restrictions on ATM usage in metros (Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad) to five free transactions a month on own bank network or three on other ATM networks. Beyond this, banks are free to charge Rs 20 per transaction. Banks such as SBI, HDFC Bank, Axis Bank have imposed these restrictions while many others have decided not to charge customers for ATM usage. That's not all. NPCI has also reported that there has been a daily dip in ATM transaction volume in November over October to the tune of 6%. The average daily volume of ATM transactions during October was nearly 86 lakh (86,46,164) and this dropped to an average daily volume of around 81 lakh transactions (81,55,718) during November 2014.
On their part, bankers maintain that the actual impact of the RBI directive will be seen by the end of the fiscal. "Our survey reveals that around 92% of our debit card customers do less than five transactions every month. We anticipate a 10% dip in ATM transactions but that will be evident in the next three months," Jairam Sridharan, president, retail lending and payments, Axis Bank said.

Axis Bank has 14 million debit card holders and on an average reports six crore ATM transactions every month. Sridharan added that while cash has associated costs, a change in customer behaviour is a more long term phenomena. "As alternative modes of payments pick up such as electronic, mobile and card based payments pick up, there will be a shift in customer behaviour. Till now, cash is a cheap payment option for the customer," Sridharan said.

YES Bank too has seen a drop in ATM usage between October and November, though it did not divulge actual numbers. "However, October was a festive month and withdrawals during festive season are normally higher," Chitra Pandeya, group president and country head, YES Bank said.