Context:
Even as banks continue to expand their physical branch networks, the growth of automated teller machines (ATMs) has plateaued in recent years. This trend reflects a structural transformation in India’s banking ecosystem, driven by changing consumer preferences and the rapid adoption of digital payment modes, particularly Unified Payments Interface (UPI).
Branch Expansion vs ATM Stagnation
According to Reserve Bank of India (RBI) data:
- ATMs increased marginally from 211,000 in FY21 to 212,000 in FY25
- In contrast, bank branches rose significantly, from 130,000 in FY21 to 140,000 in FY25
This divergence highlights a decoupling of ATM and branch expansion strategies, with branches continuing to play a vital role in financial inclusion, especially in semi-urban and rural India.
Why ATM Growth Has Slowed
- Customer behaviour shift: More people now prefer mobile and internet banking, reducing the reliance on ATMs.
- Cost of operations: Maintaining ATMs involves high cash handling, cassette swap, and maintenance expenses, making them less attractive to banks.
- UPI dominance: The widespread use of UPI has drastically reduced low-value cash withdrawals and cash-based transactions, especially in urban areas.
- Strategic pivot: Banks, especially private ones, are reallocating resources to digital platforms and urban fintech channels instead of ATM networks.
ATM Demand Remains in Rural India
Despite stagnation in overall growth, the demand for ATMs remains strong in Tier-II, Tier-III, and rural areas, where:
- Digital access is limited
- Cash is still the dominant medium of exchange
- Over 60% of India’s population resides
