Small banks gain from inter-bank use
By Vaibhav Aggarwal
Aug 5, 2009
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The banks with smaller ATM networks have witnessed an increase in the number of ATM transactions and corresponding rise in the income from the inter-bank ATM transaction based-fee.

An inter-bank ATM transaction fee of Rs 18-20 per transaction incurs every time a bank's customer uses ATM facility of another bank.

However, banks with larger ATM networks have been witnessing loss in ATM business due either increased use of ATMs of other banks by their customers. The country's largest bank, ICICI Bank has been incurring a monthly outgo of Rs 4-5 crore in form of interchange inter-bank ATM transaction fee payments.

State Bank of India (SBI) indicated that an equal number of bank customers have been using ATMs of other banks - "The total number of transactions at our ATMs have gone up by more than 100 per cent since April 1. However, our customers are also using other ATMs, depending on convenience," said, R P Sinha, deputy-managing director (IT), SBI.

"Often, ATMs of large banks have long queues outside them and if our ATM is just next door, there is a spillover into our ATMs," explained, Amitabh Chaturvedi, Managing Director, and CEO, Dhanalakshmi Bank. The bank has recorded an increase of 50 percent in the number of transactions, largely driven by customers of other banks.

However, Aspy Engineer, Senior Vice-President of Alternate Channels, Axis Bank confirmed inflows from the ATM business - "Since April, both the number of interchange transactions we have acquired and cases where our customers have gone to other ATMs have gone up by 100 per cent. However, we were a net acquirer even before the rule came into force and so are interchange revenue flows are positive," he said.

Many banks have been reconsidering to scale up their branch network in lieu of the expansion of ATMs, based on the increased number of inter-bank ATM transactions.


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