Financial Daily from THE HINDU group of publications
Wednesday, Jun 14, 2006
Financial Daily from THE HINDU group of publications Wednesday, Jun 14, 2006 |
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Money & Banking
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Information Technology Variety - Lifestyle Banks ready to set up more ATMs Archana Venkat
Chennai , June 13 Engineering student Harish does not remember when he last visited his bank. He prefers the ATM for transactions, as he does not have to fill up `challans'. His mother too has stopped visiting the bank for cash withdrawal and feels comfortable using the ATM. Though an expensive option (considering installation and maintenance costs) when compared to branches, banks are willing to set up more ATMs to improve brand visibility, besides generating revenues. Large size banks have a target of setting up at least 10 ATMs each in 2006-07. A recent RBI review says one third of all commercial banking outlets are ATMs. Private banks have at least three ATMs for one branch.
Installation cost
Rural areas offer lower land rental prices but technology handicaps may be common. The basic cost of an ATM linked to a branch, independent of other costs, would be about Rs 7.5 lakh. The hardware costs about Rs 3 lakh, the UPS and software another Rs 4 lakh, says Mr B. Rajagopalan, AGM, Technology & Communications, State Bank of India. About two years ago the basic cost of an ATM was Rs 20 lakh. Standalone ATMs cost a little more with additional investment in a VSAT (very small aperture terminal) costing about Rs 2.8 lakh. VSATs are used for real time communication instead of telephone lines. The expenditure by banks is in the region of Rs 3,000 per day per ATM. Banks take at least three years to recover the investment on an ATM. For a break-even situation at least 250 hits per day are necessary irrespective of urban or rural location.
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