Did you return empty handed from the nearest ATM because there was no cash? Those who regularly withdraw money from ATMs face this problem at least once a month – when ATM runs out of cash and you have to find another way to withdraw money from the bank. But starting in October, if the ATM fails to dispense money when needed, the lender will pay a penalty.
The Reserve Bank of India has recently started a scheme to impose fines on banks for not having cash in ATMs. The central bank took this decision due to inconvenience caused to the public due to non-availability of cash in ATMs. “Scheme of Penalty for Non-replenishment of ATMs’ has been formulated to ensure that sufficient cash is available to the public through ATMs,” RBI said in a circular.
What is the ‘penalty scheme’ for non-replenishment of ATMs?
The central bank of India has a mandate to issue banknotes and banks are fulfilling this mandate by distributing banknotes to the public through their extensive network of branches and ATMs. RBI has recently reviewed ATM downtime due to cash-out. “The ATM operations affected by cash-out lead to non-availability of cash and inconvenience to the members of the public,” the banking regulator said.
Hence, RBI has asked banks or White Label ATM Operators (WLAOs) to strengthen their systems. Banks should monitor the availability of cash at ATMs and ensure timely replenishment to avoid cash-out.
Ensure money in ATM or face penalty: RBI to banks
If the bank fails to ensure timely availability of cash at the ATM, it will face a one-time penalty. RBI said any non-compliance in this regard will be viewed seriously and will attract monetary penalty as prescribed in the scheme of penalties for non-replenishment of ATMs.
Rs 10,000 fine for non-availability of cash at ATMs
If the ATM fails to dispense cash for more than 10 hours in a month, the bank will have to pay a fine of Rs 10,000 per ATM. The central bank said that in case of white label ATMs failing to ensure cash in ATMs, a penalty would be levied from the bank, which is meeting the cash requirement of that particular operator. The bank may later collect the penalty from the WLA operator.
When will the penalty apply
On the condition for counting cash-out at an ATM, the RBI said it would come into play when the customer is not able to withdraw cash due to non-availability of cash at a particular ATM. The new rule will be effective from October.
How will the ‘penalty scheme’ work?
The regulator said lenders will have to submit a system generated statement on downtime of ATMs due to non-replenishment of cash to the Issue Department of RBI, under whose jurisdiction these ATMs are located.
In case of White Label ATM operators, the banks which are meeting their cash requirement will have to furnish a separate statement on behalf of the operator when the ATM becomes dry. Such details should be furnished for every month within five days of the following month. Example: The first such statement for the month of October 2021 shall be submitted to the issuing department on or before November 05, 2021, the RBI said.
Who will impose the fine?
The ‘Scheme of Punishment’ will be operated by the Issue Departments of the Regional Offices of the Bank. The Officer-in-Charge of the Issue Department of the Regional Office in whose jurisdiction the ATMs are located can impose fines on banks and ATMs. Lenders will have the option to appeal against the decision within one month from the date of imposition of penalty.
“Since the objective of the scheme is to ensure timely replenishment of ATMs, appeals will be considered only in cases of genuine reasons beyond the control of the bank or WLAO, such as imposition of lockdown, strike, etc. by the State or Administrative authorities. The central bank added.
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