17

lh
}anuaiy 2O14

Di. Raghuian Rajan
Coveinoi
Reseive ank of India
Ioil, Munlai.

Deai Di. Raghuian Rajan

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We aie viiling lo you as liuslees of MoneyIife Ioundalion, lhe voice of Indian saveis vilh aiound
28,OOO nenleis. We aie disluiled lo nole fion lhe nedia iepoils lhal lhe Indian anks Associalion
(IA), on lehaIf of lhe conneiciaI lanks, has iequesled you lo nodify youi guideIines vilh iegaid
lo chaiges Ievied ly lanks foi usage of ATMs, vilhoul any ihyne oi ieason lo lhe dislincl
disadvanlage of lank deposilois, vho, unfoilunaleIy, have no voice in deciding lhe chaiges Ievied
ly lanks in oui counliy.

We vish lo sulnil lhis nenoiandun lo you on lehaIf of niIIions of lank deposilois of oui counliy
lhal lhis denand fion lhe IA is neilhei faii noi equilalIe lecause lanks aie nol onIy naking no
allenpl lo use lechnoIogy lo ieduce cosls and nake lanking safei foi lank cusloneis, lul aie
naking il noie expensive and iisky.

MoneyIife Ioundalion is a nol-foi piofil oiganizalion dedicaled lo lhe cause of spieading financiaI
Iileiacy. We have a nenleiship of aInosl 28,OOO nenleis, vho lenefil fion lhe seiies of fiee
seninais and voikshops ve hoId on diffeienl lopics of connon inleiesl in lhe aieas of finance,
lanking and insuiance as veII as issues affecling lhe daiIy Iives of connon peopIe. We aie jusl
conpIeling foui yeais of dedicaled seivice lo lhe connunily, having heId 195 fiee seninais duiing
lhese evenlfuI foui yeais








As a pail of oui advocacy and enpoveinenl piogianne, ve have sel up fiee counseIing in
diffeienl aieas Iike insuiance, nuluaI funds, iaiIvay lo aIIeviale lhe suffeiings of hapIess
consuneis, vho need heIp and assislance lo soIve lhe piolIens encounleied ly lhen in lheii daiIy
Iife. We do hope you viII nuII ovei lhe Menoiandun and lake decide againsl hiking ATM chaiges
lhal lhe lanks aie denanding.

We lhank you foi youi allenlion and shaII le gialefuI foi a Iine in acknovIedgnenl.

Youis sinceieIy,




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We aie conceined lo nole fion lhe nedia iepoils lhal lhe Indian anks Associalion (IA), on lehaIf
of conneiciaI lanks in oui counliy, has iequesled lhe RI lo nodify lhe guideIines vilh iegaid lo
chaiges Ievied ly lanks foi usage of ATMs, vilhoul any ihyne oi ieason lo lhe dislincl
disadvanlage of lank deposilois, vho, unfoilunaleIy, have no voice in deciding lhe chaiges Ievied
ly lanks in oui counliy.

MoneyIife Ioundalion is of lhe fiin opinion on lehaIf of niIIions of lank deposilois of oui counliy
lhal lhis denand fion lhe IA lo change lhe iuIes foi usage of ATMs is neilhei faii noi equilalIe, as
ve aie of lhe fiin opinion lhal lhe lanks have nol leen laking enough caie of lhe safely of
cusloneis in lheii ATMs so fai. The secuiily of lanks cusloneis vho venluie lo diav cash fion
aulonaled leIIei nachines (ATMs) has leen lhe laIk of lhe counliy in lhe vake of a liulaI allack on
a Iady nanagei of Coipoialion ank in an ATM loolh in angaIoie Iale Iasl yeai. The lhiee conciele
ieasons vhy such an allack on a hapIess vonan look pIace aie lhe foIIoving:
1. The lanks have leen syslenalicaIIy vilhdiaving secuiily guaids in nosl of lheii ATMs lo
save on cosl of nainlaining ATMs, vhich heIped lhese nonsleis lo allack lhe cusloneis of
lanks duiing non-lusy houis in lhose ATMs vheie secuiily guaids veie alsenl. This is
lIalanlIy againsl lhe giound iuIes Iaid dovn ly RI vilh iegaid lo lhe secuiily
aiiangenenls iequiied lo le foIIoved in aII ATMs.

2. Mosl of lhe ATMs do nol have lhe syslen of ieguIaling lhe enliy inlo lhe ATM loolhs
lhiough lhe use of ATM caids. These caids veie used foi unIocking lhe doois of lhe loolhs,
so lhal enliy is iesliicled onIy lo lhose hoIding vaIid ATM caids. ul lhis syslen is nol
pievaIenl nov in nosl of lhe ATM kiosks, naking il possilIe foi a non-caid hoIdei lo easiIy
enlei lhe ATM loolh and pIay nischief eilhei vilh lhe peopIe inside oi even vilh lhe ATM
nachine ilseIf.

3. We do nol have a syslen of Iocking lhe shulleis aflei puIIing il up, so lhal no niscieanl can
puII lhe shulleis dovn easiIy and pIay havoc vilh lhe peison inside lhe ATM loolh. This is
vhal happened in angaIoie as lhe allack on a IoneIy vonan look pIace in lioad day Iighl,
as lhe cuIpiil puIIed dovn lhe shulleis fion inside, so lhal lhe ciine vas nol visilIe lo
oulsideis.



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Wilh lhe oljeclive of financiaI incIusion and lo nake avaiIalIe lhe lasic lanking seivices in hilheilo
unlanked aieas of oui counliy, RI has leen aggiessiveIy piopagaling selling up of ATMs in
diffeienl pails of oui counliy. And lhe RI in ils visdon has Iaid dovn ceilain guideIines lo ensuie
lhal lhese ATMs aie used ly lhe lanks cusloneis as fieeIy as possilIe lo ensuie lheii oplinun
uliIizalion and lo encouiage noie and noie peopIe lo open lank accounls vilh a viev lo liing
lhose vho aie oulside lhe anlil of lanking inlo lhe lanking foId foi lhe geneiaI good of lhe peopIe
of oui counliy.

ul lhe lanks have faiIed lo ieaIize lhal lhe liggesl leneficiaiies of pioIifeialion of lanking faciIily
lhiough lhis ioule of ATMs aie none olhei lhan lanks lhenseIves. If you ask a queslion as lo vho
has lenefiled nosl ly lhe inlioduclion of ATMs, lhe lanks vouId say, vilhoul lalling an eyeIid,
lhal il is lhe cuslonei vho has lenefiled nosl ly having access lo his accounl foi vilhdiaving cash
24 houis, 7 days a veek, lhiough oul lhe Ienglh and lieadlh of lhe counliy.

ul does il nean lhal lhe lanks have nol lenefiled ly selling up ATMs` If lhe lanks have nol
lenefiled and if il has onIy added lo lheii cosls, vhy aie lanks faIIing head ovei heeIs lo sel up
noie and noie ATMs, noie so lhe piivale secloi lanks lhal aie conscious of cosls noie lhan lhe
ISU lanks` If one goes deepei inlo lhe ialionaIe foi spieading ATMs, il is lhe lanks lhal have
equaIIy, if nol noie, lenefiled foi lhe foIIoving ieasons:
1. Theie is keen conpelilion anong lanks lo noliIize Cuiienl and Savings accounls (CASA),
as lhey aie lhe cheapesl foin of deposils foi lanks. The nain ieason foi lanks lo open noie
and noie lianches in snaIIei lovns is lo alliacl noie cusloneis, vho viII keep lheii
suipIus funds in lhese lypes of accounls. In facl, opening of a cuiienl oi savings accounl
vilh a lank is lhe leginning of a ieIalionship vilh a lank and lanks aie vying vilh each
olhei lo gel naxinun nunlei of lhese accounls lo inpiove lheii Iov cosl deposils, vhich
heIp lhen lo inciease lheii nel inleiesl naigins. ul as selling up fuII fIedged lianches is
expensive, cunleisone, and line consuning, lanks iesoil lo lhe cheapesl and easiesl vay
lo ieach oul lo peopIe ly selling up ATM kiosks, vhich alliacl peopIe lo open lheii accounl
even if lhe lianch of lhe lank is IillIe fai avay fion lheii pIace of iesidence, as opeialing lhe
accounl lecones easiei lhiough neaily ATMs. So lhe nain puipose of selling up ATMs is lo
alliacl peopIe lo open lheii accounls, and il has ieaIIy lenefiled lanks ly gelling cheap
deposils in a cosl effeclive vay.
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each lianch of a lank, saving consideialIe enpIoyee cosl vhich is lhe second highesl
expendiluie foi any lank aflei inleiesl cosl.
The afoiesaid facls aie evidenced ly lhe foIIoving lalIes:

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Souice: asic SlalislicaI Reluins of SCs

If you anaIyse lhe alove figuies foi lhe 1O-yeai peiiod fion 2OO2 lo 2O12, lhe foIIoving concIusions
aie olvious:
1. The CASA deposils have giovn ly 467 in leins of anounl and 146 in leins of nunlei
of accounls.
2. The coiiesponding giovlh in nunlei of enpIoyees is onIy 13 in iespecl of cIeiicaI slaff
and 3O in iespecl of aII enpIoyees.
3. The peiceplilIe ieduclion in giovlh peicenlage in nunlei of enpIoyees is pailIy due lo
inlioduclion of coie lanking lechnoIogy in lanks and pailIy lecause of expansion in
deIiveiy channeIs lhiough ATMs, vhich aie nov consideialIy noie lhan lhe liick and
noilai lianches.

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4. AII ATMs aie unnanned seIf-seivice kiosks, vhich do nol iequiie Iaige depIoynenl of
hunan iesouices, vhich is a dislincl advanlage foi lanks iesuIling in huge savings in
enpIoyee cosl as slaled alove.
5. The nuch Iovei giovlh in cIeiicaI slaff (al 13) is a conciele evidence of lhe facl lhal due lo
lhe Iaige inlioduclion of ATMs, lheie is nuch Iess piessuie on lhe counleis of lanks, vhich
aie noinaIIy nanned ly cIeiicaI slaff.
6. y enpIoying nuch Iovei slaff, lhe lanks have lenefilled consideialIy nol onIy in leins of
enpIoyee cosl, lul aIso in leins of ienlaI and capilaI expendiluie on physicaI infiasliucluie
iequiied in selling up liick and noilai lianches, vhich is sulslanliaI ly any slandaids.
7. Duiing one of lhe seninais on lanking, RI officiaIs have acknovIedged lhal as pei lheii
sludy, lhe ATM lased liansaclions cosl aloul 2O of lhe lianch lanking cosl, vhich can le
lioughl dovn fuilhei ly exlending and expanding lhe faciIilies nade avaiIalIe lhiough
ATMs.
8. The nosl invisilIe lenefil deiived ly aII nosl aII lhe lanks in lhe counliy ly lhe
inlioduclion of ATMs is lhe nuch Iovei peicenlage giovlh in cuslonei conpIainls as
conpaied lo lhe giovlh in nunlei of accounls, as ATMs have succeeded in consideialIy
liinging dovn lhe foolfaIIs in lianches of lanks iesuIling in nuch Iessei fiiclion lelveen
lank slaff and cusloneis, vhich is a dislincl lenefil nol ieaIized ly lhe lanking indusliy so
fai.
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Il is, lheiefoie, alundanlIy cIeai lhal lhe lanks have lenefiled lolh in leins of gaineiing noie
CASA deposils and Iovei cosl of opeialions due lo lhe inlioduclion of ATMs duiing lhe Iasl noie
lhan 1O yeais. ul lhe lenefils of such dislincl inpiovenenl in eainings of lanks have nol leen
passed on lo lhe lanks cusloneis as lank chaiges have leen conlinuousIy going up yeai aflei yeai
on sone pielexl oi olhei.

anks aie incieasingIy adopling nev lechnoIogies, lul lhey have faiIed lo liing dovn liansaclion
cosls, said Reseive ank of India, depuly goveinoi vhiIe speaking al a lanking confeience
oiganized ly lhe Indian anks Associalion sone line in Seplenlei, 2O1O. He had even said lhal
lechnoIogy nusl enalIe cuslonei faciIilalion in leins of cosl, line and convenience and il shouId
le dovelaiIed lo cuslonei needs and expeclalions.

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anks Associalion lo Ievy a chaige on ATM liansaclions, as il is nol onIy iII-conceived and
inpiudenl, lul aIso a nosl ieliogiade slep, neilhei in lhe inleiesl of lanks noi lheii cusloneis.

Apail fion ensuiing lhal aII ATM liansaclions aie fiee of aII chaiges, heie aie a fev noie
suggeslions lo cieale liusl and confidence in lhe lanking inslilulions of oui counliy. esides, lhese
viII go a Iong vay in inpioving CASA deposils of lhe lanks, foi vhich puipose ATMs penelialion
is pioposed lo le enhanced lhiough inlioduclion of vhile IaleI ATMs as veII shoilIy:

1. Al piesenl ATMs dispense cash in highei denoninalions and cusloneis do nol have lhe
oplion of gelling lhe cuiiency noles of lheii choice, foicing lhen lo again visil lhe lianch of
a lank lo exchange lhen foi Iovei denoninalions. This is inconvenienl lolh lo lhe lanks
and lhe cusloneis. AII lanks nay, lheiefoie, le insliucled lo piovide foi dispensing cash in
desiied denoninalions lhiough appiopiiale nodificalion lo lhe ATM nachines, vhich is
feasilIe and desiialIe.

2. Many lines, ve find lhal lhe ATM caids gelling sucked inlo oi svaIIoved ly lhe nachines
due lo no fauIl of lhe deposiloi. If lhis happens vhen lhe cuslonei ladIy needs cash, he/she
is doulIy inconvenienced and deseives conpensalion foi lhe anguish caused and lhe
lioulIe laken ly hin/hei lo ieliieve lhe caid oi gel a nev caid fion lhe lank. RI shouId
nandale appiopiiale conpensalion in aII such cases lo nininize such inslances ly lellei
nainlenance of ATMs.

3. Il is nol unconnon lo see ATMs faiI lo dispense cash vhiIe deliling lhe anounl lo lhe
accounls of cusloneis due lo lhe fauIl of lhe nachines. WhiIe RI has insliucled lanks lo
ieinluise lhe anounl so deliled vilhin 7 days of conpIainl ly lhe cusloneis, RI has nol
advised lanks lo conpensale lhe cusloneis foi lhe inconvenience caused, and foi undei
going lhe iignaioIe of naking a conpIainl and foIIoving il up foi no fauIl of lheiis. Il is,
lheiefoie, necessaiy lo avaid appiopiiale conpensalion lo such deposilois as veII.

WhiIe lanks aie loo eagei lo Ievy a penaIly foi lhe faiIuie lo neel lhe connilnenls ly lanks
cusloneis, lanks in luin do nol conpensale lhe cusloneis foi lheii faiIuie lo honoui lheii ovn
connilnenls nade al lhe line of opening lhe accounls. In oidei lhal lheie is peiceplilIe
inpiovenenl in cuslonei seivice in lanks, il is necessaiy foi RI lo piovide foi conpensalion lo le
paid ly lanks lo lheii cusloneis vhenevei lhey faiI in dischaiging lheii ovn duly lo cusloneis in
lhe inleiesl of equily and faii-pIay in aII lheii deaIings vilh lhe pulIic.




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And in aII lhese cases, if lhe faiIuie of ATMs is due lo lad nainlenance oi inpiopei seivicing, lhis
penaIly/conpensalion paid ly lhe lanks lo lheii cusloneis can le ceilainIy passed on lo lhose
conpanies fion vhon lhese jols aie oulsouiced, naking lhen noie accounlalIe foi lheii faiIuies
and lo ensuie piopei nainlenance of lheii nachines.

To concIude, ve ieileiale lhal as fai as lhe lank cusloneis aie conceined aII lhal nalleis lo lhen is
lhal lheii peisonaI secuiily is ensuied and lheii haid eained savings aie piolecled vilhoul any
addilionaI cosl lo lhen, as il is squaieIy lhe iesponsiliIily of lhe lanks, vho ovn lhe ATMs, lo
piovide a IeveI of secuiily needed lo piolecl ils useis and lheii funds al aII lines. Il is foi lhe lanks
lo lhink of oul-of-lhe lox soIulions lo liing dovn lhe cosl of opeialing ATMs vilhoul in any vay
conpionising on lhe safely and secuiily of lanks cusloneis. Theie is ceilainIy no case foi lanks
lo cuilaiI lhe exisling faciIilies avaiIalIe lo ATM useis, as inlioducing any iesliiclive piaclices and
inposing addilionaI luiden on lhe deposilois viII onIy iesuIl in kiIIing lhe pioveiliaI goose lhal
Iays lhe goIden eggs.

4#+"- 6+,'9@)3' B+",80-)+,

MoneyIife Ioundalion is a nol-foi piofil oiganizalion dedicaled lo lhe cause of spieading financiaI
Iileiacy. We have a nenleiship of ovei 27,5OO nenleis, vho lenefil fion lhe seiies of fiee
seninais and voikshops heId ly us on diffeienl lopics of connon inleiesl in lhe aieas of finance,
lanking and insuiance as veII as issues affecling lhe daiIy Iives of connon peopIe. We aie jusl
conpIeling foui yeais of dedicaled seivice lo lhe connunily, having heId noie lhan 195 fiee
seninais duiing lhese evenlfuI foui yeais, vilh aInosl one seninai a veek vilhoul expeclalion of
any ievaid. Oui daiIy digilaI nevsIellei goes lo ovei a Iakh of ieadeis fiee of cosl, and lhis is lhe
nediun of keeping lhe ieadeis appiised of lhe good and lhe lad deveIopnenls laking pIace in oui
econony on a daiIy lasis.

As a pail of oui advocacy and enpoveinenl piogianne, ve have sel up fiee counseIing in
diffeienl aieas Iike insuiance, nuluaI funds, iaiIvay heIpIine and of couise lanking lo aIIeviale lhe
suffeiings of hapIess consuneis, vho need heIp and assislance lo soIve lhe piolIens encounleied
ly lhen in lheii daiIy Iife.









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