ATM network new battle-zone for banks

The race for setting up shared ATM networks in the country is hotting up with the Reserve Bank of India now allowing the first independent private sector initiative led by Euronet with IDBI Bank as the settlement bank.

Two other consortiums led by Bank of India and Punjab National Bank are already wooing banks with large ATM chains to join their ranks.

The fever among banks to share ATMs comes against the backdrop of the dismantling of the Swadhan network, promoted by the Indian Banks' Association for its member banks to share their ATMs, by the end of calendar 2003.

"We are looking at tying up with banks which have a networked ATM. One of the major differentiators with other shared networks is that Euronet has the experience of running a network in other markets too. We take the responsibility of monitoring the network. Also the reconciliation and settlement will be done on a daily basis," Loney Antony, managing director, Euronet Services India, said. Euronet runs ATM networks within Europe and also in parts of Asia.

Euronet is in talks with UTI Bank, Citibank and other private, foreign and public banks. The consortium led by BoI is also in talks with UTI Bank and Citibank. Banks such as Oriental Bank of Commerce are also being wooed by the BoI and PNB led-consortiums.

ICICI Bank, SBI, UTI Bank and HDFC Bank, which have the largest ATM spread, will be crucial for the success of the shared networks.

Of these, only UTI Bank, which has around 850 ATMs, is in talks for sharing its network. The other major banks are, however, not looking at sharing their ATMs at least for now.

The PNB consortium includes Andhra Bank and Vijaya Bank and PNB is the settlement bank. The BoI consortium includes Indian Bank, Syndicate Bank, United Bank of India. Dena Bank and Union Bank of India are likely to join this consortium, which has 500 ATMs.

Bankers said connectivity and pricing will be the key. BoI's consortium will initially offer this service free and later charge less than Rs 10 a transaction. Bankers, however, feel that charges less than Rs 20 may not be economical.

"The fees levied cannot be more than what a bank would like to pay for using an ATM service- it has to be less than the cost which the bank would incur if it sets up its own ATM network. The fees, however, should also induce a bank with a large number of ATMs to cover its costs. The dividing line is very thin. The minimum charges on a no-profit no-loss basis is around Rs 20 a transaction," a private banker said.