RBI grants banks, ATM operators more time for cassette swap mechanism
The Reserve Bank of India (RBI) has given banks and ATM operators some wiggle room for implementing the cassette swap mechanism for cash replenishment in ATMs.
The banking regulator has exempted cash recycler machines (CRMs) from the cassette swap requirement for cash replenishment.
Additionally, this exemption applies when banks don’t engage outsourced agencies for cash replenishment in ATMs.
This leeway comes after these entities missed deadlines for implementing the cassette swap mechanism for cash replenishment in ATMs multiple times, leading the RBI to extend the deadline.
In 2018, the RBI had asked banks to implement the cassette swap mechanism in a phased manner, covering at least one-third of ATMs operated by them each year so that all ATMs would achieve cassette swap by March 31, 2021. However, the implementation has been tardy.
Now, the RBI has asked banks to expeditiously implement the roadmap for cassette swap implementation by March 31, 2025.
Now, the RBI has asked banks to expeditiously implement the roadmap for cassette swap implementation by March 31, 2025.
Under the cassette swap mechanism, lockable cassettes filled with banknotes are used in ATMs that are swapped at the time of cash replenishment.
Cassette swap ensures better outcomes
Banks have cited various constraints, including the availability of an adequate number of cassettes, the readiness of cash replenishment agencies to deal with cassette swaps, and costs, for the slow progress in implementing the cassette swap mechanism in ATMs.
Manjunath Rao, Advisor (Managed Services), CMS Info Systems, said: “When the RBI decided to mandate the transition to cassette swap in India, we strongly backed it, as this is the standard operating process adopted worldwide. Cassette swap process not only supports the RBI initiative of a clean note policy…it ensures better outcomes for the consumers, ATM deployers, and the banks as well.”
This move to exclude the cash recyclers from the cassette swap process is, in fact, a step back and needs further discussion and debate, he added.
Rao observed that a large percentage of recyclers are, in fact, replenished with currency, and in these cases, there is no distinction compared to an ATM.
Further, in cases of recyclers that have higher deposits than withdrawals, a cassette swap process will ensure better risk management through the supply chain.
“Given that the industry has already invested in the infrastructure to support cassette swap for all these ATMs and recyclers, it needs to be seen how the cost recovery will be handled and if indeed it will now have to be passed on to the existing network,” Rao said.
Three sets
As per estimates, each ATM will require three sets of five cassettes — one set in the ATM, one in transit, and another at the branch/cash-in-transit (CIT) company (ready for loading the next day).
The cost of each cassette is in the range of ₹15,000 to ₹20,000. As of August 2024, there were 2.55 lakh ATMs in the country. Of these, 2.20 lakh were bank-owned ATMs, and 35,000 were owned by White Label ATM Operators.