Page 46 - Banking Finance March 2019

ARTICLE

Analysis Analysis

Number of ATMs are high in SBI followed by BOB. If we With regard to Branch vs. ATMs, on-site ATMs and off-site
take the ratio of Branch vs. ATM, the ratio is more in SBI ATMs ratio is good in SBI, where as this ratio is very low in
followed by IDBI. If more number of ATMs is installed, the Allahabad Bank and Dena Bank. There is a scope for more
foot falls of the customers will reduce drastically, most of ATMs in these two banks. Off-site ATMs are low in Syndicate
the cash disbursements will happen through ATMs and Bank (for every 9.70 on-site ATMs 1 off-site ATM). Most of
pressure on branches will come down and they can the ATMs of Syndicate bank is located in branch premises.
concentrate more on other business opportunities instead Thereby overheads of RTL may reduce substantially. But the
of disbursing cash through branches. This ratio is very low ideal ratio is 1:0.50.
in Allahabad Bank and Punjab & Sind Bank i.e., 0.34 and
0.81. Due to less number of ATMs, the customers of the There by the cost of operations of RTL will reduce. The
number of debit cards issued per ATM is high in Allahabad
bank are forced to use other bank ATMs, thereby service
Bank and transactions per ATM and amount disbursed by
charges are to be paid by bank to the other banks.
one ATM per annum is more in Indian Bank. In Indian Bank,
This is also an additional burden to the customers. Thereby the utilization of ATMs is more. But in case of Allahabad
customers are forced to open the accounts with other banks bank, even though they issued more number of ATM cards,
where number of ATMs are more. Some of the banks are usage is less. These factors are also to be analyzed by the
using White and Brown labeled ATMs to reduce the cost of banks for optimum utilization of ATMs installed by them.
capital expenditure and other revenue expenditure to the Thereby per transaction cost of ATM will reduce and the
bank. This is one good strategy to the banks to control the pressure on the branches will reduce substantially.
capital expenditure. But sometimes, if number of hits are
more in a strategic location, it is beneficial to the bank to Branch vs. POS Machines
install own ATMs instead of using white and brown labeled Following table shows number of POS machines and Branch
ATMs. vs. POS machines of top six banks with higher ratio as on
31.03.18
Cost-benefit-Analysis of installation of own ATM vs. White /
Name of the Bank POS BRANCH Vs. POS
Brown Labeled ATMs is to be studied, accordingly decision
State Bank of India 609,789 27.21
has to be taken by the banks. Instead of installing ATMs,
banks should go for ATM-cum-CDM, thereby the cash Corporation Bank 161,984 66.39
receipts transactions at the branch reduced further. Bank of India 85,980 16.58
Whenever the life of the ATMs is over, it is better replace Bank of Baroda 77,253 14.13
with combo type alternate delivery channel like ATM-cum-
CDM, thereby further cost of transaction will reduce Punjab National Bank 50,241 7.18
further. IDBI Bank 29,553 15.42

Other information on alternate delivery channels
Following table shows important ratios of alternate delivery channels as on 31.03.18.
PARAMETER HIGHER Ratio LOWER Ratio
Branch Vs. ATMs Ratio State Bank of India 1:2.66 Allahabad Bank 1:0.34
Branch Vs. On-Site ATMs State Bank of India 0.84:1 Dena Bank 5.33:1
Branch Vs. Off-Site ATMs State Bank of India 0.68:1 Allahabad Bank 12.25:1
On-Site ATM Vs. Off-Site ATMs Dena Bank 0.26 Syndicate Bank 9.70
ATM Vs. Number of Cards Issued Allahabad Bank 1:11445 Punjab & Sind Bank 1:2256
ATM Vs. Number of Transactions Indian Bank 1:8717 Punjab & Sind Bank 1:974
ATM Vs. Amount Disbursed (1 ATM Per Annum) Indian Bank Rs.21.48 Syndicate Bank Rs.0.79
Millions Millions

46 | 2019 | MARCH | BANKING FINANCE