The landscape of cash access in India is undergoing a significant transformation, driven by the nation's accelerating shift towards digital transactions. A recent report from the Reserve Bank of India (RBI) reveals a notable contraction in the country's Automated Teller Machine (ATM) network, even as the physical footprint of bank branches continues to grow.
The Great ATM Contraction: Who's Cutting and Who's Growing?
The central bank's data shows a clear decline in the total number of ATMs across the nation. This reduction is primarily attributed to the rapid digitalisation of payments, which has diminished the everyday need for cash withdrawals among customers. Private sector banks spearheaded this contraction, reducing their ATM fleet from 79,884 machines to 77,117. Public sector banks also trimmed their networks, albeit more modestly, from 134,694 ATMs to 133,544, largely by shutting down offsite units.
In a contrasting trend, white label ATM operators—entities that set up and run ATMs but are not banks—expanded their presence. Their network grew from 34,602 machines to 36,216, indicating a strategic shift in how cash access points are managed.
Branch Expansion and the Rural Focus
While ATMs dwindled, the number of physical bank branches moved in the opposite direction, registering a growth of 2.8 per cent to reach approximately 164,000. This expansion was led by public sector banks. Notably, more than two-thirds of the new branches opened by public sector banks were established in rural and semi-urban areas. In comparison, only 37.5 per cent of new private bank branches were opened in these regions.
The report also highlighted the steady progress in financial inclusion through Basic Savings Bank Deposit Accounts (BSBDAs). These accounts grew by 2.6 per cent to reach 72.4 crore, with balances swelling by 9.5 per cent to Rs 3.3 lakh crore. A key finding was that most of these accounts are operated through business correspondents, underscoring their critical role in taking banking services to the grassroots.
Deposit Insurance and Urban-Rural Divide in ATM Access
On the security of deposits, the RBI report offered reassuring news. It stated that 97.6 per cent of all deposit accounts remained fully covered under the existing insurance limit of Rs 5 lakh at the end of the financial year 2024-25. However, the coverage ratio for the total value of insured deposits saw a slight dip to 41.5 per cent from 43.1 per cent in the preceding year.
The geographical distribution of ATMs revealed a distinct pattern. Public sector banks maintained a relatively even spread of their machines across rural, semi-urban, urban, and metropolitan areas. Private and foreign banks, however, continued to concentrate their ATM networks predominantly in urban and metropolitan centres, highlighting an ongoing accessibility gap.
The RBI's analysis confirms that the fundamental driver behind the shrinking ATM network is the behavioural change among consumers. As digital payment platforms become more ubiquitous and user-friendly, the necessity for frequent visits to an ATM for cash is steadily declining, reshaping India's financial infrastructure.
