ATM Numbers Shrink Despite Record Cash Circulation As India Shifts To Digital Payments

Despite record-high cash circulation, Indian banks are scaling back on automatic teller machines (ATMs) and cash recycler machines amid a shift toward digital transactions, with UPI becoming the preferred method for routine payments.

As of September 2024, India had 215,000 ATMs, down from 219,000 the previous year, according to data from the Reserve Bank of India. 

Most of this decline was in off-site ATMs (which are not at the premises of bank branches), whose numbers fell to 87,638 from a high of 97,072 in September 2022.

This reduction in ATMs occurs at a time when cash in circulation has surged to Rs 34.70 lakh crore, marking a 100 per cent rise since demonetisation. 

Cash-based transactions accounted for 89 per cent of all payments in FY22, and cash circulation represented 12 per cent of India’s GDP that year. 

Yet, ATM penetration in India remains low, with only 15 machines available per 100,000 people, as highlighted in a 2022 RBI report.

Factors such as RBI restrictions on free ATM transactions, limited ATM interoperability, and slow growth in interchange fees have made the ATM business increasingly non-lucrative.

As a result, India’s ATM model is shifting toward a global standard of two machines per branch (one on-site and one off-site), according to industry experts cited in The Economic Times report.

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