The ATM story: Banks move to cash recyclers from just dispensers
MUMBAI: Public sector banks (PSBs) are accelerating plans to modernise their automated teller machine (ATM) networks by replacing ageing cash dispensers with cash recyclers, as recurring cash shortages in tier-2 and tier-3 centres expose the limitations of legacy infrastructure.
More than 15,000 ATM units are expected to come up for request for proposals (RFPs) for cash recyclers, with nearly 77% of these belonging to PSBs, according to industry executives. Punjab National Bank, Union Bank of India and Bank of India are among the lenders expected to issue recycler RFPs.
Cash recyclers are machines that both dispense and accept cash, enabling banks to reuse deposited currency for withdrawals. This reduces cash replenishment costs, improves machine uptime and lowers operational expenses.
"The recent cash shortages have highlighted the need for banks, particularly public sector lenders, to modernise their ATM infrastructure. A large part of the PSB ATM estate still consists of traditional cash dispensers that require frequent replenishment and manual intervention," said a senior PSB executive, who did not wish to be identified.
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The urgency is more pronounced for public sector banks that continue to manage a large portion of their ATM networks in-house. Around 90,000 on-site ATMs operated by PSBs are yet to be outsourced, making them more vulnerable to operational disruptions and cash management challenges, according to industry executives.
Four key factors are driving the outsourcing wave, they said. Regulators have been encouraging banks to focus on core banking operations while partnering with specialist firms for non-core activities. At the same time, escalating employee costs, tighter compliance requirements and increasing technology investments have made in-house ATM management less economical.
More than 15,000 ATM units are expected to come up for request for proposals (RFPs) for cash recyclers, with nearly 77% of these belonging to PSBs, according to industry executives. Punjab National Bank, Union Bank of India and Bank of India are among the lenders expected to issue recycler RFPs.
Cash recyclers are machines that both dispense and accept cash, enabling banks to reuse deposited currency for withdrawals. This reduces cash replenishment costs, improves machine uptime and lowers operational expenses.
"The recent cash shortages have highlighted the need for banks, particularly public sector lenders, to modernise their ATM infrastructure. A large part of the PSB ATM estate still consists of traditional cash dispensers that require frequent replenishment and manual intervention," said a senior PSB executive, who did not wish to be identified.
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The urgency is more pronounced for public sector banks that continue to manage a large portion of their ATM networks in-house. Around 90,000 on-site ATMs operated by PSBs are yet to be outsourced, making them more vulnerable to operational disruptions and cash management challenges, according to industry executives.
Four key factors are driving the outsourcing wave, they said. Regulators have been encouraging banks to focus on core banking operations while partnering with specialist firms for non-core activities. At the same time, escalating employee costs, tighter compliance requirements and increasing technology investments have made in-house ATM management less economical.
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