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White vs Brown Label ATMs Explained

The Indian government has approved 100% foreign direct investment in white label ATMs through the automatic route. White label ATMs are owned and operated by non-banking companies, unlike traditional ATMs which are owned by banks. This move aims to expand access to ATMs, especially in rural areas where penetration has been low, in order to further financial inclusion across India.

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Kamaal Ahmad
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66 views2 pages

White vs Brown Label ATMs Explained

The Indian government has approved 100% foreign direct investment in white label ATMs through the automatic route. White label ATMs are owned and operated by non-banking companies, unlike traditional ATMs which are owned by banks. This move aims to expand access to ATMs, especially in rural areas where penetration has been low, in order to further financial inclusion across India.

Uploaded by

Kamaal Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

WWW.COMEONINDIA.

COM

TARGET IAS – 2016 BATCH

WHITE LABEL ATM VS BROWN LABEL ATM

WHY RECENTLY IN NEWS?

 The Union Cabinet has recently approved the proposal to allow 100 per
cent foreign direct investment (FDI) in white labelled automated teller
machines (ATM) through the automatic route.

EARLIER POSITION

 Earlier Private Non-Banking entities which are interested to get foreign


funds for setting up White label ATMs should get prior approval from
Government of India.

 Now GoI has given 100% FDI in automatic route. It will lead to more
inflow of foreign funds.

WHAT ARE WHITE LABEL ATMS

 Most ATMs or Automated Teller Machines are owned by banks. But


ones that are owned and operated by non – banking companies are
called white label ATMs.

CONCEPT OF WHITE LABEL ATMS IN INDIA BEFORE 2012

 Before 2012, only banks were allowed to set up and operated ATMs in
India.

RBI’S 2012 ANNOUNCEMENT

 In 2012, RBI has issued policy guidelines permitting non –bank entities to
set up and operate white label ATMs.

NEED FOR WHITE LABEL ATMS


 In India, ATM penetration has been very low [ < 100 per 10 lakh
population]
 Most of the ATMs are concentrated in urban areas. So RBI has allowed
non – banking companies to deploy white label ATMs to expand their
reach in rural areas.

CONDITIONS NEED TO BE FULFILLED

 Non – Banking entities proposing to set up white label ATMs have to


make an application to RBI for seeking authorization under the payment
& settlement systems act 2007.
 Such entities should have a minimum set worth of rs – 100 crores at the
time of making application.
 Certain minimum no of W.L.As need to be installed in semi – urban and
rural areas within a year.

WHITE LABEL ATMS – A NEW INITIATIVE TO ACHIEVE FINANCIAL INCLUSION

 The establishment of W.L.As in semi-urban and rural areas [ tier III & tier
IV areas] will lead to financial inclusion.

WHAT IS BROWN LABEL ATMS

 Brown Label ATMs are those automated Teller Machines where


hardware and lease of ATM machine is owned by a service provider, but
cash management and connecting to banking networks is provided by a
sponsor bank whose brand is used on the ATM.

BENEFITS OF WHITE LABEL ATMs

 Introduction of White Label ATMs will result in faster financial growth


and financial inclusion.

 White label ATMs will be set up in small cities and towns. So it will help
to achieve financial inclusion.

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