To ensure smooth operation and enhanced viability for White Label ATMs (WLAs), the Reserve Bank of India (RBI) has permitted White Label ATM Operators (WLAOs) to buy wholesale cash directly from the apex bank and currency chests. This is a strategic move given that these WLAs tend to grapple with cash shortages due to the preferential treatment banks give to ATMs deployed by them. Previously, cash management at WLAs was entirely the onus of the Sponsor Bank but this policy change will allow WLAO to procure cash directly from the RBI. This opportunity is expected to stimulate the proliferation of WLAs across the country, facilitating deeper penetration of financial inclusion.
Understanding The Concept of White Label ATMs
White Label ATMs, or WLAs, are Automated Teller Machines set up, operated, and owned by non-banking entities. They are legitimized by the Companies Act 1956, which permits non-bank entities incorporated within India to operate these machines. In September 2015, the Government allowed complete Foreign Direct Investment (FDI) under the automatic route. These non-banking entities are authorized to establish WLAs in India, post acquiring authorization from the RBI under the Payment and Settlement Systems (PSS) Act of 2007. It is mandatory that these non-banking entities should have a minimum net worth of Rs. 100 crores.
The Inception of White Label ATMs In India
The first company to be sanctioned by the RBI to launch White label ATMs in the country was Tata Communications Payment Solutions Limited (TCPSL). The ATMs were launched under the brand name ‘Indicash’.
Functionality of White Label ATMs
White Label ATMs resemble ordinary ATMs in their basic functionality. However, they do not permit the facility of cash deposit or acceptance and lack the branding of any particular bank. These machines are predominantly deployed by Non-Banking Financial Institutions (NBFC). The primary idea behind the creation of White Label ATM is to expand the geographical coverage of ATMs to boost financial inclusion.
Table of Facts
| Parameter | Fact |
|---|---|
| Authority to Authorize WLAs | Reserve Bank of India (RBI) |
| Minimum Net Worth Requirement | Rs. 100 Crore |
| First Company to launch WLAs | Tata Communications Payment Solutions Limited (TCPSL) |
| Brand Name of First WLAs | Indicash |
| Cash Deposit Facility | Not Available at WLAs |
The Concept of Brown Label ATM
Brown Label ATM is another concept based on the strategy of cost-sharing. In this model, the hardware of the ATM is owned by the service provider, but the responsibilities of cash management and network connectivity lie with the sponsor bank. Unlike WLAs, these type of ATMs bear the logo of the sponsor bank. Consequently, Brown Label ATM emerges as a cost-effective solution for banks.
