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TARGET IAS – 2016 BATCH

WHITE LABEL ATM VS BROWN LABEL ATM

WHY RECENTLY IN NEWS?

 The Union Cabinet has recently approved the proposal to allow 100 per
cent foreign direct investment (FDI) in white labelled automated teller
machines (ATM) through the automatic route.

EARLIER POSITION

 Earlier Private Non-Banking entities which are interested to get foreign

funds for setting up White label ATMs should get prior approval from
Government of India.

 Now GoI has given 100% FDI in automatic route. It will lead to more
inflow of foreign funds.

WHAT ARE WHITE LABEL ATMS

 Most ATMs or Automated Teller Machines are owned by banks. But

ones that are owned and operated by non – banking companies are
called white label ATMs.

CONCEPT OF WHITE LABEL ATMS IN INDIA BEFORE 2012

 Before 2012, only banks were allowed to set up and operated ATMs in
India.

RBI’S 2012 ANNOUNCEMENT

 In 2012, RBI has issued policy guidelines permitting non –bank entities to
set up and operate white label ATMs.

NEED FOR WHITE LABEL ATMS

  In India, ATM penetration has been very low [ < 100 per 10 lakh
population]
 Most of the ATMs are concentrated in urban areas. So RBI has allowed
non – banking companies to deploy white label ATMs to expand their
reach in rural areas.

CONDITIONS NEED TO BE FULFILLED

 Non – Banking entities proposing to set up white label ATMs have to

make an application to RBI for seeking authorization under the payment
& settlement systems act 2007.
 Such entities should have a minimum set worth of rs – 100 crores at the
time of making application.
 Certain minimum no of W.L.As need to be installed in semi – urban and
rural areas within a year.

WHITE LABEL ATMS – A NEW INITIATIVE TO ACHIEVE FINANCIAL INCLUSION

 The establishment of W.L.As in semi-urban and rural areas [ tier III & tier
IV areas] will lead to financial inclusion.

WHAT IS BROWN LABEL ATMS

 Brown Label ATMs are those automated Teller Machines where

hardware and lease of ATM machine is owned by a service provider, but
cash management and connecting to banking networks is provided by a
sponsor bank whose brand is used on the ATM.

BENEFITS OF WHITE LABEL ATMs

 Introduction of White Label ATMs will result in faster financial growth

and financial inclusion.

 White label ATMs will be set up in small cities and towns. So it will help
to achieve financial inclusion.