Reasons behind the Introduction of White Label ATM by RBI

What is a White-label ATM?

A white-label ATM (Automated Teller Machine) is a type of ATM that operates without displaying the branding of a specific bank or financial institution. Instead, it is run and managed by non-banking entities known as White Label ATM Operators (WLAOs), which are authorized by regulatory authorities like the Reserve Bank of India (RBI) in the Indian context. Development of the rural areas has been an important topic across the government. This upliftment is crucial for the Indian economy as the majority of the Indian population still lives in rural areas. Even though there are stats that support this statement, according to a report from the World Bank 64.61% of the working Indian population comes from a rural background. Rural India contributes to almost 50% of the total GDP making it a significant domain to serve by financial institutions. To speed up the process of development, there is a strong need to make financial services readily available at an affordable cost. To cater to this issue, the government is ensuring the delivery of financial services such as bank accounts, low-cost credits, financial advisories, and insurance services. Earlier, banks had limited reach towards rural areas and this area lacked getting proper attention from banks and financial institutions in order to provide basic banking facilities. As per RBI, more than 70% of active ATMs are located in urban areas. In order to facilitate the stagnant distribution of ATM service, RBI came up with the concept of White-label ATMs....

Features of White-Label ATM

White Label ATMs, operated by non-banking entities, offer neutral branding, promoting collaboration among multiple banks. With shared infrastructure, extended reach to rural areas, and regulatory oversight, White Label ATMs contribute to cost-effective, inclusive banking services. The features of White-Label ATMs are:...

Reasons behind the Introduction of White Label ATM by RBI

The concept of White Label ATMs (WLAs) was introduced by the Reserve Bank of India (RBI) to address certain challenges and promote financial inclusion in India. The key reasons for introducing White Label ATMs include:...

Objective of establishing White-label ATM

Financial inclusion: Financial inclusion helps to develop a culture of savings in the segments of the rural areas, which has its role to cultivate overall economic development. Initiatives of financial inclusion include banks providing basic savings bank deposit accounts with facilities such as no minimum balance, withdrawal/deposit of cash, ATM facility, etc. to every account holder. White label ATMs helps in achieving this objective. Driving ATM penetration: ATM penetration in India doesn’t have satisfying figures, as per the data on a population base of 10lakhs there are less than 100 ATMs, whereas in USA the figure is 14 times that of Indian ATMs. The government in order to irradicate the issue has invited private players to enter this business domain to reach masses. Cultivating banking habits: White label ATMs are like mini banks, as they not only perform cash dispensing service but they also provide basic banking services like checking account balance, providing mini statements, payments of bills, cheque book request, etc. which will help the rural area to understand basic banking feature and connect them with mainstream banking services. Geographical reach: To ensure better geographical reach and financial inclusivity, keeping in mind the large population of the country. This was done to provide banking customer services all over the country and tackle the geographical adversities which was faced by banking sector as these private players are already in business line in such distant places and they understand the challenges and solutions better than the government. Encourage Non bank players: Government has introduced White Label ATMs to brought up and to ease the pressure on the public banks while giving the private companies a way to make profit out of the financial system, but with the end goal being betterment of the rural and semi urban region. Obtain FDI: Recently, the government has announced that there can 100% of FDI in establishing white label ATMs, this will allow foreign players to provide the ATM services in India, and customer can get better options and better service....

White-Label ATM operator in India

Initially there were 8 private entities who entered the White Label ATM business, out of which as of now only four are operative. Following were the initial entities to open white label ATMs...

Different types of ATMs which are available in India

Brown Label ATM: ATMs where the hardware and the lease of the machine are owned by a service provider, but here the cash management and connectivity to banking networks are provided by the sponsor bank. They have the promoted with the branding of the bank. Orange Label ATM: ATMs provided for share transactions. are mainly used by investors and traders for buying and selling stocks and securities. Yellow Label ATM: ATMs are set up for the purpose of e-commerce transactions. These type of ATMs are mainly used by online shoppers and merchants for making payments and purchases. Pink Label ATM: ATMs monitored by guards whose responsibility is to ensure that only women access these ATMs. These type of ATMs are set up to provide safety and convenience to women customers. Green Label ATM: ATMs are provided for transactions related to agriculture. These type of ATMs are mainly used by farmers and rural customers for various banking needs. Online ATM : These ATMs are connected to the bank’s database all the time. In case on an online ATM, account holder can’t withdraw more than the balance in your account. Offline ATM: These ATMs aren’t connected to the bank’s database. In case of an offline ATM, account holder will be able to withdraw beyond the balance in his account in case it falls within the prefixed withdrawal limit but in such a case the bank may charge a penalty for the same....

Advantages of White-Label ATMs

The advantages of White Label ATMs (WLAs) are-...

Disadvantages of White-Label ATMs

While White Label ATMs (WLAs) offer several advantages, they also come with certain disadvantages.They are-...

Conclusion

Government is taking a lot of steps for the financial inclusion of rural and semi urban population, and the idea to open more ATMs, in the form of privatized, non-banking entities has also proved to be a successful one. White label ATMs even though operated by private entities are keeping in mind that there primary objective is providing customer service and spread banking awareness among the rural population, and there incentives comes second. WLAs although not operated by banks but are regulated by RBI, and it makes sure that all the statutory and regulatory guidelines are followed by operators. As of now there are four major private entities who are managing the white label ATMs. States like Uttar Pradesh, Bihar, Madhya Pradesh, have seen a tremendous growth in establishment of WLAs. WLAs provide several value added services to customers, which helps to spread basic banking awareness among rural population. Government should make sure that the dispute resolution mechanism should be improved and the cost should be minimized so that people can prefer these WLAs without a second thought....

FAQs on White-Label ATM’s

1. What is the full form of WLA?...