ATM cash withdrawals halved in April

Cash withdrawals from automated teller machines (ATMs) declined by 50% in value from the preceding month in April — the first full month of the nationwide lockdown.ATM withdrawals fell to ₹1.28 lakh crore from the ₹2.51 lakh crore in March, Reserve Bank of India data showed. In February, ₹2.86 lakh crore was withdrawn at ATMs. All other payment system indicators also showed a sharp decline in value in April compared with the preceding months, indicating the magnitude of the impact that the lockdown had on economic activity.

 ATM manufacturers said apart from restrictions on movement that hit transactions, an inclination to conserve liquidity among bank customers also led to the reduction in withdrawals.“In the last week of March and in entire April, ATM transactions dropped hugely,” said Rustam Irani, MD & CEO, cash business, Hitachi Payments Services. “At bank ATMs, the drop was anywhere between 40-55%. For white label ATMs, it was from 58-65%,” he added. The higher drop at white label ATMs was because a number of them were deployed in rural areas and depended on bank branches in rural centres for providing cash.“The reason is, one, people cannot go outside. Also, when economic activity stops people want to save money,” Mr. Irani said. India has a little more than 2.4 lakh ATMs, of which Hitachi manages over 55,000. ATM maintenance hitMr. Irani added that ATM maintenance was also impacted as movement of engineers was restricted during the lockdown, affecting transactions. “ATMs require physical access. You have to go and load cash… if may be needed, a spare part needs replacement. Engineers were unable to go and fix the ATMs during lockdown. So, if a ATM is not working, people will not be able to access cash. Maintenance has suffered big time,” he said.Digital payments were also affected in April. For example, transactions of prepaid payment instruments such as mobile wallets saw a significant drop. Data released by the Reserve Bank of India (RBI) showed transaction volume in mobile wallets dropped to ₹8,693 crore in April compared with ₹13,111 crore in March. By the last week of May, as some lockdown restrictions were eased, there was a marginal increase in the withdrawals at ATMs. “We believe that it will take a little while to get back to normal. But how quickly that little while is nobody knows. “I think, when economic activity returns, people will go back to earlier spending habits,” Mr. Irani added.

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