A Study on On-Site vs. Off-Site Distribution of India’s ATM & CRM Network in 2024

A Study on On-Site vs. Off-Site Distribution of India's ATM & CRM Network in 2024

ABSTRACT

On-Site ATMs and CRMs, usually located within or adjacent to bank branches. Off-Site ATMs and CRMs, usually Located away from bank branches, often in commercial areas, shopping malls, or remote locations, off-site ATMs and CRMs significantly extend the reach of banking services. 

● According to the latest data from April 2024 by the Reserve Bank of India, the country boasts approximately 2.18 lakh ATMs and CRMs. Of these, around 1.27 lakh are on-site, while 92 thousand are off-site.

● Public sector banks lead the charge in expanding the ATM and CRM network across India. Among the on-site ATMs and CRMs, public sector banks contribute 61%, with private sector banks contributing 36%.

● The State Bank of India (SBI) stands out as the top performer, with over 63 thousand ATMs and CRMs, securing a 29% share of the national network.

 

Table of Contents

Background

The banking infrastructure in India has undergone a significant transformation over the past few decades, with the Automated Teller Machines (ATMs) and Cash Recycling Machines (CRMs) playing pivotal roles in enhancing financial inclusion and customer convenience. The introduction of ATMs in India dates back to the late 1980s, with HSBC installing the first ATM in Mumbai in 1987. Over the years, the penetration of ATMs has grown exponentially, driven by both public and private sector banks. The Reserve Bank of India (RBI) has actively promoted the deployment of ATMs to improve banking access, particularly in rural and semi-urban areas. CRMs, a more recent innovation, have gained traction as they offer the dual functionality of dispensing and accepting cash, thus improving cash management for banks and customers alike. These machines help in recycling deposited cash for withdrawals, reducing the need for frequent cash replenishment and enhancing operational efficiency.

On-Site vs. Off-Site ATMs and CRMs

On-Site ATMs and CRMs: These are located within or adjacent to bank branches. The primary advantage of on-site ATMs and CRMs is the security and convenience for customers who can easily access other banking services at the branch. They are particularly useful for large transactions or complex issues that might require bank staff assistance.

Off-Site ATMs and CRMs: Located away from bank branches, often in commercial areas, shopping malls, or remote locations, off-site ATMs and CRMs significantly extend the reach of banking services. They provide 24/7 access to banking transactions, enhancing customer convenience. Off-site locations are strategic for capturing footfall from non-banking locations, thereby increasing customer touchpoints.

Impact on financial inclusion

The widespread deployment of ATMs and CRMs has significantly contributed to financial inclusion in India. These machines provide essential banking services such as cash withdrawals, deposits, fund transfers, and balance inquiries, thereby reducing dependency on bank branches. For the rural and underbanked population, off-site ATMs and CRMs are often the most accessible banking touchpoints.

Moreover, the interoperability of ATMs, facilitated by the National Financial Switch (NFS), allows customers of any bank to use ATMs of other banks, enhancing accessibility. This has been particularly beneficial in areas with limited banking infrastructure, ensuring that even small and remote communities have access to basic banking services.

Technological advancements and challenges

Technological advancements have played a significant role in the evolution of ATMs and CRMs. The integration of biometric authentication, contactless transactions, and enhanced security features has improved the user experience and reduced fraud. Additionally, the adoption of solar-powered ATMs and mobile ATMs has extended the reach to remote and underserved regions.

However, challenges remain in terms of maintaining and managing the vast network of ATMs and CRMs. Ensuring the availability of cash, particularly during peak times and in rural areas, remains a logistical challenge. Security concerns, including ATM fraud and vandalism, require continuous investment in surveillance and technology upgrades.

The network of on-site and off-site ATMs and CRMs in India has become a cornerstone of the country’s banking infrastructure, driving financial inclusion and enhancing customer convenience. While significant progress has been made, continued efforts are required to address the urban-rural divide, improve technological integration, and ensure the security and efficiency of these machines. The future of banking in India will likely see further innovations in ATM and CRM technologies, continuing to reshape the financial landscape and bring banking services closer to every Indian.

Key statistics

Fig: 1

According to the latest data from April 2024 by the Reserve Bank of India, the country boasts approximately 2.18 lakh ATMs and CRMs. Of these, around 1.27 lakh are on-site, while 92 thousand are off-site. This distribution indicates that 58% of these machines are on-site, while the remaining 42% are off-site. Public sector banks are at the forefront of this deployment, with nearly 1.34 lakh ATMs and CRMs, followed by private sector banks (80 thousand). Both on-site and off-site deployment trends reflect this hierarchy.

Fig: 2

The distribution within different types of banks reveals that public sector banks and private banks are significantly skewed towards on-site ATMs and CRMs (around 57%), whereas foreign banks maintain a nearly equal distribution. For small finance banks, an overwhelming 99% of ATMs and CRMs are located on-site (fig: 1 & fig: 2).

Leadership in ATM & CRM network deployment

Fig: 3

Public sector banks lead the charge in expanding the ATM and CRM network across India. Among the on-site ATMs and CRMs, public sector banks contribute 61%, with private sector banks contributing 36%. The trend is similar for off-site ATMs and CRMs, with public sector banks managing 62% and private sector banks 37%. Collectively, public sector banks account for 62% of the total ATM and CRM network in India, clearly leading over private sector banks, which hold a 37% share (fig: 3).

Exceptional performers in ATM & CRM network expansion

Fig: 4

The State Bank of India (SBI) stands out as the top performer, with over 63 thousand ATMs and CRMs, securing a 29% share of the national network. Following SBI, HDFC Bank has deployed around 21 thousand machines, accounting for 9.6%, while ICICI Bank has about 17 thousand, representing 7.9%.

Fig: 5

These three banks, alongside Axis Bank, which also contributes significantly, constitute more than 50% of the total ATM and CRM network in India. Notably, this top-tier group includes three private banks (HDFC Bank, ICICI Bank, and Axis Bank) and one public sector bank (State Bank of India) (fig: 4 & fig: 5).

Performance across different categories

Among the foreign banks, DBS India Bank leads with 910 ATMs and CRMs, which make up 73% of the total deployment by foreign banks. Within the private sector, HDFC Bank has the largest network, followed by ICICI Bank and Axis Bank. These three private banks collectively control over 60% of the ATMs and CRMs deployed by private banks, with HDFC Bank accounting for 26%, ICICI Bank for 22%, and Axis Bank for 14%.

Fig: 6

Among public sector banks, SBI again takes the lead, followed by Canara Bank and Punjab National Bank. These three banks represent 32%, 11%, and 11% of the public sector deployment, respectively. In the small finance bank sector, AU Small Finance Bank leads with 692 ATMs and CRMs, followed by ESAF Small Finance Bank and Ujjivan Small Finance Bank, with 616 and 600 machines respectively. These banks account for 23%, 20%, and 20% of the small finance bank deployments, respectively (fig: 4 & fig: 6).

Deployment locations: On-Site vs. Off-Site

Fig: 7

Among banks with a significant share of ATMs and CRMs, only a few have a distribution highly skewed towards off-site locations. The State Bank of India has the highest percentage of off-site ATMs and CRMs at 61%, followed by Axis Bank at 60%, Tamilnad Mercantile Bank at 57%, and DBS India Bank at 52%.

Foreign banks with the largest ATMs and CRMs network, such as DBS India Bank and Standard Chartered Bank show different trends; DBS India Bank has an almost equal distribution of on-site and off-site ATMs and CRMs, whereas Standard Chartered Bank has a skew towards on-site deployment with 62%.

For private banks with significant ATMs and CRMs networks across India, such as HDFC, ICICI, and Axis Bank, only Axis Bank shows a higher percentage of off-site deployments around 60%, while HDFC and ICICI are skewed towards on-site deployments at 57% and 59%, respectively.

Public sector banks with the largest network of ATMs and CRMs such as State Bank of India, Canara Bank, and Bank of Baroda also exhibit varied deployment trends. While the State Bank of India has a higher percentage of off-site ATMs and CRMs at 61%, Canara Bank and Bank of Baroda are more skewed towards on-site deployments at 68% and 75%, respectively (fig: 7).

The distribution and performance of ATMs and CRMs in India show a clear dominance of on-site deployments, particularly by public sector banks, with significant contributions from leading private banks. The State Bank of India emerges as the top performer in this landscape, followed by key private sector banks like HDFC and ICICI. The strategic deployment across different categories and locations underscores the varied approaches banks are taking to expand their reach and enhance customer convenience.

Potential issues and solutions in ATM & CRM deployment in India

Skewed distribution of ATMs & CRMs

There is a significant skew towards on-site ATMs and CRMs, particularly among public sector and small finance banks. This concentration can limit accessibility for customers in remote or less urbanized areas where off-site machines are necessary. Banks need to adopt strategies to balance the deployment by increasing off-site ATMs and CRMs in underserved regions. 

Operational challenges in Off-Site ATMs & CRMs

Off-site ATMs and CRMs often face higher risks of vandalism, technical issues, and security concerns compared to on-site machines. Implementing robust security measures such as surveillance cameras, tamper-proof designs, and regular maintenance schedules can mitigate these risks. Additionally, deploying advanced technology like remote monitoring and automated troubleshooting can ensure higher uptime and service reliability.

High concentration of ATMs & CRMs by few banks

The ATM and CRM network is heavily dominated by a few major banks like SBI, HDFC, and ICICI. This concentration may limit competition and innovation in the ATM and CRM services sector. Encouraging smaller banks and new entrants to expand their ATM and CRM networks can foster competition. Regulatory bodies could offer incentives such as subsidies or tax benefits for banks that deploy machines in underserved areas.

Technological upgradation and maintenance

Many ATMs and CRMs, especially those operated by smaller banks or in remote areas, often suffer from outdated technology and poor maintenance, leading to frequent downtimes and customer dissatisfaction. Banks should prioritize the upgrading of ATM and CRM infrastructure to ensure compatibility with the latest security and operational standards. Regular maintenance and updating of software can prevent technical failures and improve user experience. 

Regulatory and compliance challenges

Complying with stringent regulatory requirements for ATM and CRM deployment often causes challenging situations for banks, particularly smaller ones, leading to slower expansion and higher operational costs. Simplifying regulatory procedures and providing clear guidelines can help banks, especially smaller ones, to comply more efficiently. Additionally, offering technical support and compliance training can assist in smoother operations.

Addressing these potential issues requires a multifaceted approach involving strategic deployment, enhanced security measures, competitive incentives, and comprehensive user education. By implementing these solutions, banks can improve the accessibility, reliability, and efficiency of ATMs and CRMs across India, fostering greater financial inclusion and customer satisfaction.

References

  1. BankBazaar, & BankBazaar. (n.d.). ATM – What is an Automated Teller Machine (ATM). BankBazaar. https://www.bankbazaar.com/ifsc/atm-machine.html
  2. Pandya, A. (2008, June 17). Spot the difference: Onsite & offsite ATMs. Hindustan Times. https://www.hindustantimes.com/india/spot-the-difference-onsite-offsite-atms/story-awJtXBFipr1nHlVZXKGrpJ.html
  3. Bank, K. M. (2024, September 9). What is ATM: Meaning, Full Form, Benefits, and How It Works. Kotak Mahindra Bank. https://www.kotak.com/en/stories-in-focus/accounts-deposits/savings-account/what-is-atm-full-form-definition-uses.html
  4. Adusei, C. (2015). Atm Performance In Access Bank Ghana Ltd: A Case Study Of Offsite And Onsite ATMS in Kumasi (Doctoral dissertation).
  5. Mokha, A. K. (2022). Growth and impact of ATMs in India.

 


 

About Author:

Pankaj Chowdhury is a former Research Assistant at the International Economic Association. He holds a Master’s degree in Demography & Biostatistics from the International Institute for Population Sciences and a Bachelor’s degree in Statistics from Visva-Bharati University. His primary research interests focus on exploring new dimensions of in computational social science and digital demography.

Ananya Geetey is pursuing a BSc in Economics and Analytics at Christ University, with core interests in Economics, International Trade, and Machine Learning.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of 360 Analytika.

Acknowledgement: The author extends his gratitude to the Reserve Bank of India for providing data support.

This article is posted by Sahil Shekh, Editor at 360 Analytika.

You May Like This