New Delhi: Concerns over cash availability at ATMs across India have prompted the government to seek urgent feedback from banks after reports of cash replenishment issues and the possibility of service disruptions, particularly in Tier-2 and Tier-3 cities. The development follows warnings issued by the Confederation of ATM Industry (CATMi), which has alerted regulators and banking institutions about a growing cash shortage that could impact ATM operations in several parts of the country.
According to industry representatives, a significant number of ATMs in smaller cities and towns are facing the risk of going offline due to inadequate cash supplies. CATMi has raised the matter with the Reserve Bank of India (RBI) and has reportedly attributed much of the problem to cash distribution patterns involving the State Bank of India (SBI), the country’s largest public-sector lender.
As per reports, ATM operators informed RBI and SBI officials during a meeting held on June 5 that an excessive amount of cash was allegedly being routed to ATMs located in Tier-1 cities and metropolitan areas. This, they claim, has reduced cash availability in smaller cities and towns, where customers continue to depend heavily on ATM services for withdrawals and routine banking transactions.
SBI operates approximately 65,000 ATMs across India, making it the largest ATM network in the country. Industry sources have stated that the bank manages cash handling for nearly half of its ATM network independently, with a substantial portion of these machines located in metropolitan centres. ATM operators argue that this concentration of cash resources in larger cities has contributed to shortages elsewhere.
An ATM industry executive, speaking anonymously to media outlets, claimed that while several smaller banks have been able to manage cash supplies effectively, challenges associated with SBI’s network have intensified the issue. The executive alleged that a large share of available cash is being directed toward metro-city ATMs, leaving smaller regions vulnerable to shortages.
The situation has also sparked financial concerns within the ATM industry. CATMi has claimed that operators have collectively suffered losses exceeding ₹100 crore due to machines remaining offline because of cash shortages. When ATMs run out of cash, operators lose revenue generated through transaction charges and interchange fees, affecting an industry that is already grappling with shrinking margins.
As a result, CATMi has demanded compensation of ₹100 crore from the banking industry. The organisation has further warned that if the issue is not resolved by June 20, a substantial number of ATMs across smaller cities and towns could face temporary shutdowns, potentially disrupting banking access for millions of customers.
Industry representatives point out that the challenges extend beyond cash distribution. Operating costs for ATM service providers have risen significantly in recent years. According to operators, minimum wages have increased by around 60 percent, while fuel prices and maintenance expenses have also climbed sharply. At the same time, ATM usage has been declining as digital payment systems continue to gain popularity across the country.
Data cited by industry stakeholders indicates that monthly ATM cash withdrawal transactions fell from approximately 570 million in January 2023 to around 439.5 million by September 2025. The decline in transaction volumes has reduced revenue opportunities for ATM operators while operating expenses have continued to rise.
These pressures have already affected the size of India’s ATM network. The total number of ATMs reportedly declined to around 251,000 during 2024-25, compared with more than 253,000 a year earlier. Much of this reduction has taken place in rural areas and smaller towns, where maintaining ATM infrastructure has become increasingly challenging.
Despite concerns about possible ATM closures, there has been no government announcement regarding the shutdown of ATMs in small towns. The government’s latest move to seek feedback from banks appears aimed at assessing the extent of the problem and ensuring uninterrupted banking services for customers.
