With the Reserve Bank of India’s (RBI’s) new standards for cash logistics companies kicking in from July 6, some lenders are raising the issue of higher costs and are making a case for higher inter-bank payments for use of automated teller machines (ATMs). On April 6, 2018, the RBI had come out with new prescriptions for companies that undertake cash services on behalf of banks. The guidelines were to come in force within 90 days.
Under the new norms, lenders must ensure that they engage service providers and their sub-contractors with a net worth of at least Rs 100 crore. In case of existing agreements, banks have to ensure that the net worth criteria is met by March 2019. Cash logistics companies need to have a minimum fleet size of 300 specifically fabricated cash vans. These vans should be equipped with GPS, tubeless tyres, an emergency hooter and CCTV covering both passenger and cash compartments.
Rituraj Sinha, group managing director, SIS Group, said, “The guidelines were much needed, in fact overdue. A working group created by the Indian Bank Association in 2013-14 had first highlighted the pressing need for regulating cash logistics operations. Currency logistics is completely outsourced by banks and demonetisation highlighted the vital role of private cash logistics operators in the currency management ecosystem.”
He added that while in the short term they are likely to push up cost of operations, in the long term they will save money by improving efficiency and reduce fraud. “The RBI guidelines are benchmarked with global standards. Currency management is regulated in most major economies by the central bank,” he added.
According to banks, the RBI also wants lenders to discontinue open cash replenishment and top-up in ATMs. Instead, it has asked banks to use lockable cassettes in their ATMs which shall be swapped at the time of cash replenishment. This move comes after a couple of incidents where personnel in charge of cash refilling replaced banknotes with play money. A bank official said, “Shipping cassettes instead of cash would mean lesser quantity in every cash van.” It will also increase the transit cycle as cash will have to be moved from currency chests to bank vaults to refill the cassettes.