Essay Writing -Descriptive English For Bank Exam

              Write a short notes on White Label ATMs (WLA ) 

Introduction
Traditionally, Automated Teller Machines (ATMs) have respective bank’s logo. So just by looking, this is SBI’s ATM, this is ICICI’s ATM and so on.But White label ATM doesn’t have such Bank logo, hence called White label ATMs.RBI has given license / permission to non-bank entities to open such ATMs.
Any non-bank entity with a minimum net worth of Rs.100 crore, can apply for white label ATMs. (not just NBFC, any non-bank entity can apply.)
Tata Communications Payment Solutions Limited  is the first company to get RBI’s permission to open White label ATMs.They started their chain under brandname “Indicash”.
Other White label are Muthoot Finance, Srei Infra., Vakrangee Software, Prizm Payments, AGS. More than 15 companies given such permission.

Need for introduction of White Label ATMs

So far, the banks have played major role in setting up and encouraging usage of Automated Teller Machines (ATMs) in India. The total number of ATMs set up in India by public, private and foreign banks is around 90,000 ATMs across India, but they are mostly concentrated in the urban areas and cities. While, the other parts of country especially, the tier III to tier VI cities have not seen any substantial growth in number of ATMs, which could have popularised the personal banking in rural areas and could have played an important part in financial inclusion.
Therefore, RBI has relaxed its policy about setting up of ATMs and has allowed the participation of non-banking financial institutions to set up the White Label ATMs. These White Label ATMs are owned and operated by the NBFCs while functioning just in the same way as any other bank-run ATM does.

• The RBI aims at expanding the reach of banking services in rural areas since the non-banking financial companies have to maintain a certain ratio of their ATMs between the rural and urban India.
• RBI wants to expand the ATM network to ensure financial inclusion. With more and more people indulging in personal banking and having easy access to cash, white label ATMs will deepen the reach of banking services.

 Features of White Label ATMs

1. The five free transactions in a month that are applicable to bank customers for using other bank’s ATMs would also include the transactions effected at the White Label ATMs.
2. The WLA operator is entitled to receive a fee from the customer’s banks for the giving the service of their ATM resources to the banks customers. But the WLAs are not permitted to charge bank customers directly for use of WLAs.
3. The cash facility to the White Label ATM will be provided by the Sponsor bank.
4. The authorised non-bank financial company or the WLA Operator (WLAO) have the freedom to choose the location for setting up of the WLA.

Benefits of White Label ATMs:

The white label automated teller machines(ATM) are likely to benefit customers as well as banks.

• The expansion of ATM network will allow customers to withdraw funds at more varied locations.
• WLA will make personal banking more convenient by facilitating cash withdrawal facilities near to a large number of bank customers.
• Banks support introduction of white label ATMs because these are likely to reduce pre-transaction cost for the banks.
• Due to WLAs, banks will not have to deal with the problems relating to maintaining and running the payment channel.

Problems and Limitations of White Label ATMs:

1. A major concern is regarding the issue of failed transaction. The inconvenience caused to customers in case of failed transactions on WLAs will have to be addressed.
2. In case of dispute, the dispute resolution mechanism will involve three entities, namely the WLA operator, the sponsor bank of the WLA operator, and the bank of the customer.
3. Since the WLA operators will be a non bank entity and will be running purely on profit basis, they may take long time or completely avoid timely payments on account of failed transactions.
4. The issue of cost will discourage customers, as they will be required to pay a fee to use the white label ATMs, given that no free transactions are allowed on the WLAs.
5. So far no state-run bank has tied up with a WLA operator, this sidelines the field of WLAs from mainstream financial inclusion agenda.
6. The financial viability of white label ATMs is under scanner due to their low interchange fee, and high operation costs.
7. If there is a bank-managed ATM in the same area as a WLA, then the white label ATMs would be a victim of cannibalisation.