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Poornima Mohandas

A signboard in a Mumbai area tells it all.

Mumbai , April 7

`SPACE available for ATM', is a familiar signboard in newly set up residential/commercial complexes.

Real estate agents call up banks to set up ATMs because the cash-dispensing machine is known to increase traffic to complexes and malls. This is just the beginning of a trend feel observers with the burgeoning mall culture and construction boom in the country.

"I do not encourage agents to call me. I let the branch managers decide on whether they want to set up an ATM or not,'' said Mr Aspy Engineer, Vice-President, ATM Channel Management, UTI Bank.

The bank has a network of over 1,200 ATMs and is keen to set up another 400 this fiscal. Many banks are currently firming up their ATM deployment plans with the finalisation of internal budgets.

A bank typically sets up an ATM within a few km of a branch where it has already built up a critical mass of 2,000-2,500 account holders. They also deploy ATMs in areas, which are expected to grow at a zooming pace. An ATM needs at least 100 transactions per day within the first one-year of operations to be viable. This can be scaled up to a maximum of 450 transactions per day at which stage the bank may consider deploying a second ATM, at times within the same rental space, to support the customer traffic.

If a machine does not reach its first hurdle of 100 transactions per day within the first one-year of operations, the bank often decides to relocate the machine. Like others, which relocates unviable machines, UTI Bank relocated about 35 machines in the year gone by. ATM networks, an alternative channel for banking that has caught the fancy of the average Indian bank customer, is a cost-intensive channel packed with both initial set-up costs of about Rs 10 lakh and running costs of Rs 35,000-50,000 a month for security, rentals, electricity and cash replenishment.

The prices of these machines have come down from Rs 25 lakh ten years back to below Rs 5 lakh at present. "We play one ATM vendor against the other to lower prices. Soon we should get it at the price of a Maruti 800,'' said a bank official. In India as is the case world over; NCR Corporation and Diebold Inc. are the two prominent ATM vendors.

Bankers from CEO downwards negotiate prices of ATMs. PSU and private banks are cost-conscious and mostly prefer to go for the plain vanilla ATM machine, which permits the customer to withdraw cash and check the balance.

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