Banks to pay fine if ATMs fail to dispense cash

In a great relief to customers who are in need of withdrawing cash from ATMs, the Reserve Bank of India (RBI) has decided to impose a penalty on banks if their ATMs run out of cash from 1 October 2021. The inconvenience caused to the public due to the non-availability of cash in ATMs led the central bank to take this decision. “The ‘Scheme of Penalty for Non-replenishment of ATMs’ has been formulated to ensure that sufficient cash is available to the public through ATMs,’ the RBI said in a circular.

‘Scheme of Penalty for Non-replenishment of ATMs’

The central bank has a mandate to issue banknotes and the banks are fulfilling this mandate by dispensing banknotes to the public through their wide network of branches and ATMs. In this connection, a review of downtime of ATMs due to cash-outs was undertaken and it was observed that ATM operations affected by cash-outs lead to non-availability of cash and cause avoidable inconvenience to the members of the public. It has, therefore, been decided that the banks/ White Label ATM Operators (WLAOs) shall strengthen their systems/ mechanisms to monitor the availability of cash in ATMs and ensure timely replenishment to avoid cash-outs. The Scheme of Penalty for non-replenishment of ATMs has been formulated to ensure that sufficient cash is available to the public through ATMs.

Rs 10,000 penalty for non availability of cash in ATMs

As regards the quantum of penalty, the central bank said “cash-out at any ATM of more than ten hours in a month” will attract a flat penalty of Rs 10,000 per ATM. In the case of White Label ATMs (WLAs), the penalty would be charged to the bank, which is meeting the cash requirement of that particular WLA.

When will penalty be applicable?

When the customer is not able to withdraw cash due to the non-availability of cash in a particular ATM. The Scheme shall be effective from October 01, 2021. Therefore, banks/ WLAOs should put in place a robust system for monitoring the availability of cash in ATMs and ensure timely replenishment to avoid cash-outs.

How scheme of penalty work?

Banks shall submit a system-generated statement on the downtime of ATMs due to non- replenishment of cash to the Issue Department of RBI. In the case of WLAOs, the banks which are meeting their cash requirement shall furnish a separate statement on behalf of WLAOs on cash-out of such ATMs due to non-replenishment of cash. Such statements shall be submitted every month within five days of the following month i.e., first, such statement for the month of October 2021 shall be submitted on or before November 05, 2021, to the Issue Department concerned.

Who will impose the penalty?

The Scheme of Penalty will be administered by Issue Departments of the Regional Offices of the Bank. The Competent Authority to impose a penalty will be the Officer-in-Charge of the Issue Department of the Regional Office under whose jurisdiction the ATMs are located. Appeal against the decision of the Competent Authority, if required, may be made by the banks/ WLAOs to the Regional Director/Officer-in-Charge of the Regional Office concerned, within one month from the date of imposition of penalty.

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