The country is likely to see addition of over 1 lakh ATMs in the next four years with banks expanding their rural and semi-urban network towards achieving greater financial inclusion, according to a study.
"The number of ATMs doubled in the last three years, reaching 99,218 ATMs in June 2012. The industry is expected to continue on the path of high growth and reach 200,000 ATMs by 2016," global research and advisory firm Celent said in a study.
"Most of the new ATMs (50-65 per cent) will be deployed in tier II and III cities, while tier I cities will grow at around 20%," it said.
HSBC was the first bank to established an ATM machine in 1988 in Mumbai.
As per the report, the industry is now entering the next phase.
The main drivers for future growth are likely to be regulatory changes relating to financial inclusion, increasing penetration, and white-label ATMs, it said.
The study titled 'The Indian ATM Industry: Gearing Up for the Next Phase of Growth' said, several forces are driving the heightened importance of ATMs in India.
The biggest push has come from the Reserve Bank of India. RBI, in conjunction with the government of India, has been focusing on the issue of financial inclusion for some time now, it noted.
A large proportion of India's population is still unbanked or underbanked, it said, adding, banks have traditionally targeted urban areas for setting up new branches and ATMs because they can thereby target a sizable population with relatively less investments in infrastructure.
After a decade of rapid growth, the urban market has now become saturated, while the rural regions remain largely untapped.
Therefore, RBI in recent years has been trying to design policies to encourage financial institutions to look beyond the urban region, it said.
According to the report, banks are slowly expected to move out of ATM operations and focus on their core business.
It is likely that only around 25-30% of all ATMs will be managed by banks in 2016.
Around 30-40% of ATMs will be managed under the managed services model, while the rest will come under complete outsourcing, it said.
As a natural consequence of likely changes and competition among a large number of service providers and banks, it said, customers are expected to benefit with more ATMs with wider reach, more efficiency, and reduced transaction fees.