HDFC Bank not to cut its ATM rollout plans

HDFC Bank does not intend to cut on its automated teller machines (ATM) rollout plan in spite of the Reserve Bank giving an in-principle nod for white label ATMs, which will be operated by non-banking companies, a top official said today.

The bank will not cut its ATM rollout target as a result of the RBI’s draft guidelines allowing non-banking entities to set up ATMs, also called as white-label ATMs, said Mr Rahul Bhagat, HDFC Bank Head (Direct Banking Channels).

Asked about the cost of setting up an ATM, Bhagat said up to 50 per cent of transactions in its existing ATMs are done by non-HDFC Bank account holders, resulting in good fee income, which will take care of the installation cost.

Moreover, he pointed out that when a bank sets up an ATM, it is also about giving the customer a feel of the service that each bank wants to give out on its own.

Meanwhile, HDFC Bank today tied-up with Visa and Monitise—promoted Movida to facilitate mobile—based transactions for its debit and credit card—holders.

Under the service, mobile phone users using any handset and even without Internet connectivity will be able to pay for services like electricity bills and mobile recharges.

Power pulls the plug on ATMs

Paul, who hails from Kerala and pursuing his second year in engineering in a college in Coimbatore, was in dire need of cash. He walked up to the ATM outside the college campus only to find the placard ‘Out of Order' placed on the screen of the cash dispensing machine.

Since there were at least four more ATMs (of other banks) within a distance of some 100 yards from the hostel, Paul decided to walk up, but found that none of the ATMs there was functional.

He did not give up. He took his friend's bike and decided to try at an ATM in another location (area) in the city. But no luck there either.

Common man affected

Paul is not alone in this hunt for a functional ATM. Elsewhere in the city a labourer sought the help of this correspondent to draw cash from the ATM.

“I tried to withdraw Rs 200 from the machine closest to my home. The guard there said that the machine was not functioning. Can you help me draw cash please?' he asked, thrusting his card.

But that ATM was also not responding to requests. Why? Frequent power outages of around 8-10 hours that the city has been experiencing for nearly a month now seems to have brought the problem to the fore in unexpected ways.

Hitherto, it was only industrialists who were raising a hue and cry about the acute shortage in power supply, while the common man bore the agony in silence.

Now it is beginning to hurt them more directly.

At least 60 per cent of the ATMs seems to go out of order because of the frequent power cuts.

Though the ATMs are backed by inverters, bankers say that there isn't sufficient time to charge the batteries. “We did not expect such long spells and frequent cuts in power. The inverter battery back-up is for two hours. We are trying to address the issue now,” said one banker.

While another said that ATM maintenance was being outsourced, so he was not in the know of the problem.

Conserving energy

Bankers say they try and conserve energy whenever possible. That includes switching off lights when not required because of the load on the inverter, and so on.

The situation remains bleak for now. Ironically even as ATMs are everywhere, the functional ones are few in this southern industrial hub.

lnr@thehindu.co.in

White label ATMs may not hit banks' rollout plans too much

Banks do not plan to ease up on their ATM expansion drive despite the Reserve Bank of India's plans to allow non-banks to set up white label ATMs (WLAs), say bankers.

ATMs are an important part of banks' alternative channel strategy to reach customers, to showcase their products and services, and create brand awareness. This is reflected in the increase in the number of ATMs in the April 2011-January 2012 period, during which banks added 14,477 ATMs. At end January 2012, the country had 89,655 ATMs, according to the National Payments Corporation of India.

Banks will deploy their own ATMs because it helps to retain customer loyalty. If WLAs becomes a reality, they may tweak their strategy by focussing on putting their own ATMs in areas where they have a high customer density.

A white label ATM may work in an area where real estate/ rental charges are very high or in smaller centres where banks may not want to set up their own ATMs.

While welcoming the RBI's move to allow WLAs to ensure penetration of the ATM network in the country, bankers caution about the pitfalls — customers could be inconvenienced in case of failed transactions on WLAs as the dispute resolution mechanism will involve three entities — the WLA operator, the sponsor bank of the operator, and the customer's bank.

Currently, in the case of failed ATM transactions, the customer has recourse to his bank, though he may have transacted at another bank's ATM. Another issue that non-banks setting up ATMs could face is whether a customer would be ready to pay charges for transacting on WLAs.

Service providers gung-ho

The development of ATM services in any market goes through certain phases. Banks use ATMs first for product differentiation and branding and, in the next phase, for customer acquisition and retention, explained Mr Loney Antony, Managing Director, Prizm Payment Services.

“It was imperative that the RBI permit white label ATMs. It was only a matter of time. The main concern for the RBI was the regulatory framework, but with several banks outsourcing ATM management, white label ATMs are a natural extension,” said Mr Antony.

Except in the US, in all markets that allow white label ATMs, the share of such ATMs is no more than 25 per cent of the entire ATM network. They are always complementary to bank ATMs.

According to Mr Rajiv Kaul, Executive Vice-Chairman and CEO of CMS Info Systems, white label ATMs will bring more efficiency and help keep ATM set-up costs down. However, certain issues need to be ironed out, such as the guidelines related to sponsor banks.

In the last two years India has seen lot of ‘brown label' ATMs, or outsourcing of ATM services by banks. Hence, market players are awaiting the final guidelines to see how the WLAs will be different.

Today there are managed-services outsourcing companies that perform such functions as switching, cash management and technical management for banks.

About 50-60 per cent of the ATMs in India are already outsourced in some way or the other.

priyan@thehindu.co.in

kram@thehindu.co.in

Mahesh Bank launches RuPay ATM card

The increasing use of ATM cards will be cost-effective for banks as well as customers, according to Mr A.P. Hota, Managing Director and Chief Executive Officer of National Payment Corporation of India.

Speaking after formally launching ‘Mahesh RuPay ATM card' Mr Hota said Mahesh Bank had taken a lead in the cooperative sector in south India by launching its ATM card.

R. Ramesh Kumar Bung, Chairman, Mahesh Bank said his bank's business had crossed Rs 1,775 crore and the branch expansion was being spread to different states.

Mr A S Rao, Regional Director, Reserve Bank of India said the number of urban cooperative banks had come down from 115 to 103 in the recent past.

ATMs were a versatile instrument and an important delivery channel, he added.

The National Payment Corporation of India Ltd has launched the ‘Rupay' ATM card mainly for no frills account holders in collaboration with banks.

It is expected to reduce overall transaction costs for banks by introducing competition to international card schemes like Visa and Master.

nagasridhu@thehindu.co.in

ATM card delivery fraud: ICICI Bank fined

ICICI bank has been directed by a consumer forum to pay Rs 20,000 as compensation to one of its consumers whose ATM card was delivered to a wrong hand, who withdrew money from the account fraudulently.

The ATM card landed at a wrong address and was used for withdrawing over Rs 48,000 from the savings account of a person, who was waiting for the same to be delivered at his address.

A District Consumer Disputes Redressal Forum (Central) gave its ruling in the favour of account holder Datta Ram, saying that the act of the private bank caused "mental agony and harassment" to him for its failure to return the money to his account in spite of information that it was not withdrawn by him using the ATM card.

The consumer forum also held that non-delivery of ATM card and withdrawal of money from the account of the customer by somebody else amounts to "deficiency of service" by the bank.

"The demand of Rs 48,900 from the complainant and then the act of the bank to withdraw that amount from his saving account amounts to deficiency in service," B B Chaudhary, President of the Central Delhi consumer forum, said in the order.

"On account of the act of the bank, the complainant had to send legal notice and suffered harassment, pain and mental agony," the panel said while also awarding him Rs 5,000 towards litigation charges.

The complainant had said that on November 15, 2008 he received SMS alert that Rs 48,900 was withdrawn from his savings account through his ATM card and he had immediately informed the bank that he never received the card and thus he could not have done the transaction.

The bank denied that it caused any deficiency in service and contended that the ATM card and PIN were duly delivered to the complainant and that only he or someone to whom he allowed access to the ATM card withdrew the money and the bank cannot be held liable.

The forum brushed aside the bank's argument that it had delivered the ATM card and the PIN number to Datta Ram, saying that the delivery sheet of the courier firm used by the bank shows that the card and the PIN number were not delivered to Datta or any member of his family.

"The bank has failed to place or file affidavit of any authorised officer of the courier service or the delivery man to confirm that card was delivered to the complainant or any of his family members.

"In the circumstances, we hold that the bank has failed to establish that ATM card or its PIN was delivered to the complainant or any of his family members," the panel added.

The complainant had contended that the delivery sheet bore the name of a Datu Ram, but without his complete address and that the mobile number on the delivery sheet belonged to a third person and not the complainant.

Source: Financial Express

ATM card delivery fraud: ICICI Bank fined

ICICI bank has been directed by a consumer forum to pay Rs 20,000 as compensation to one of its consumers whose ATM card was delivered to a wrong hand, who withdrew money from the account fraudulently.

The ATM card landed at a wrong address and was used for withdrawing over Rs 48,000 from the savings account of a person, who was waiting for the same to be delivered at his address.

A District Consumer Disputes Redressal Forum (Central) gave its ruling in the favour of account holder Datta Ram, saying that the act of the private bank caused "mental agony and harassment" to him for its failure to return the money to his account in spite of information that it was not withdrawn by him using the ATM card.

The consumer forum also held that non-delivery of ATM card and withdrawal of money from the account of the customer by somebody else amounts to "deficiency of service" by the bank.

"The demand of Rs 48,900 from the complainant and then the act of the bank to withdraw that amount from his saving account amounts to deficiency in service," B B Chaudhary, President of the Central Delhi consumer forum, said in the order.

"On account of the act of the bank, the complainant had to send legal notice and suffered harassment, pain and mental agony," the panel said while also awarding him Rs 5,000 towards litigation charges.

The complainant had said that on November 15, 2008 he received SMS alert that Rs 48,900 was withdrawn from his savings account through his ATM card and he had immediately informed the bank that he never received the card and thus he could not have done the transaction.

The bank denied that it caused any deficiency in service and contended that the ATM card and PIN were duly delivered to the complainant and that only he or someone to whom he allowed access to the ATM card withdrew the money and the bank cannot be held liable.

The forum brushed aside the bank's argument that it had delivered the ATM card and the PIN number to Datta Ram, saying that the delivery sheet of the courier firm used by the bank shows that the card and the PIN number were not delivered to Datta or any member of his family.

"The bank has failed to place or file affidavit of any authorised officer of the courier service or the delivery man to confirm that card was delivered to the complainant or any of his family members.

"In the circumstances, we hold that the bank has failed to establish that ATM card or its PIN was delivered to the complainant or any of his family members," the panel added.

The complainant had contended that the delivery sheet bore the name of a Datu Ram, but without his complete address and that the mobile number on the delivery sheet belonged to a third person and not the complainant.

Source: Financial Express

Public sector banks' ATM move 'has not hit SBI's plans'

The move to set up ATMs through a consortium of public sector banks (PSBs) in the country has not hampered the ATM-related activities of State Bank of India, according a top executive.

The move follows a directive by the Government in this regard.

In an informal chat with Business Line on the sidelines of a CSR (corporate social responsibility) programme of the bank here on Thursday, Mr A. Krishna Kumar, Managing Director and Group Executive (National Banking) of SBI, said that the process of putting ATMs through consortium of PSBs has not hampered its plans related to ATMs.

Stating that the bank has nearly 26,000 ATMs in the country, he said: “We need more ATMs there is no doubt about that. Our number of debit cards is very strong. We have more than 10 crore debit cards. It is not that the current process has hampered us in anyway in our efforts to supply ATM cards and debit cards to our customers.”

Before the decision was taken at the ministry level to consolidate the ATM requirements of the entire PSBs, SBI had thought of installing around 10,000 ATMs during the current fiscal. “Because of this development, our progress has not been there in this front,” he said.

The ultimate objective of this method is to reduce the cost, and to have a standardised format of ATMs, he said.

Asked about the progress in the procurement of ATMs through consortium mode, Mr Krishna Kumar said that it is at the RFP (request for proposal) stage.

“I think some time is given to the ATM manufacturers and suppliers to respond to the RFP and to the tender. May be in a couple of months all things would be completed,” he added.

vinayakaj@thehindu.co.in

Cash retraction system in ATMs may be removed

The cash retraction system in ATM machines may soon be a thing of the past. The Reserve Bank of India has agreed to the National Payments Corporation of India's proposal to remove this functionality from all machines after a pilot proved extremely effective in curbing misuse.

The central bank is taking this step as it has come across cases of people forcibly trying to defraud the banking system by holding on to a few pieces of notes in ATM machines that has cash retraction system (that is, cash getting sucked back by the machine, if not removed within a specified time, often seconds), and then claiming non-receipt of cash.

“Of course due notice will be given to all customers. So remember, hereafter if you are careless to walk away from an ATM forgetting to collect your cash, it is lottery for the next user!,” said Mr G. Padmanabhan, Executive Director, RBI, at a function to launch the Tamilnadu Mercantile Bank's mobile banking service in Chennai.

kram@thehindu.co.in

SBI ATM at Ganga Sagar

State Bank of India, Bengal Circle, opened on Saturday a temporary ATM at the Ganga Sagar mela ground for the benefit of the large number of pilgrims visiting the mela due to start shortly on the occasion of Makar Sankranti, according to a press release issued by SBI. The ATM facility will be available till January 16, the release added.

Solar ATMs fuel rural revolution in India

NEW DELHI: An Indian start-up is catalysing a quiet revolution by designing, developing and installing unique solar-powered ATMs in rural areas.

The initial lot of 400 solar ATMs, aptly called Gramateller ('gram' means village), the world's largest order, placed by the State Bank of India ( SBI), has been winning accolades for performance and substantial energy savings.

The ATMs were installed in 2010-11 across several states, usually within 20-50 km of the district headquarters, Vijay Babu, CEO of Vortex Engineering, which makes these units, told IANS from Chennai.

Following SBI's success with solar ATMs, the Catholic Syrian Bank also placed an order for 50 Gramatellers and Indian Bank for 20, while 10 more have been ordered by other banks, he added.

Both Babu and Lakshminarayan Kannan, who founded Vortex, are the alumni of the Indian Institute of Technology-Madras (IIT-M) and the brains behind the Gramateller.

"Our plans to operate ATMs on solar power were greeted with utter disbelief. We faced challenges initially in getting them adopted by our end users, the rural folks, who are not particularly tech-savvy. But once they realised that they were getting control of their own money, they accepted it wholeheartedly," said Babu.

"The workload has increased with more and more people using these facilities which, in most cases, are the only ATMs within 20 km or more, thanks to the solar power backup," added Babu.

The two entrepreneurs took up the project in 2004-05 at IIT-M's suggestion, developing and fine-tuning the product until it became commercially viable in 2008-09.

The IIT-M, which had been initially approached by the banks to develop a robust rural alternative to the existing ATMs, passed on the proposal to Vortex. Babu and Kannan have since inked a royalty agreement with their alma mater.

"Conventional ATMs may not be viable in areas subject to 8 to 10 hours of power cuts, given their dependence on gensets and air-conditioning. But thanks to the rural Gramateller, villagers don't have to undertake time-consuming trips to cities or towns for money," said Kannan.

Vortex is the only Indian company making it to the Time magazine 2011 list of "10 start-ups that will change your life", selected out of 31 companies honoured as "Technology Pioneers" by the World Economic Forum.

Vortex was recently selected as the latest entrant to Business Call to Action (BCtA), a global initiative that encourages private sector efforts to fight poverty, supported by the UN Development Programme, among others.

"The 'no frills' Gramateller has a 12-hour power back-up, provided there is good sunlight at least for five hours daily. Solar panels convert these rays into electrical energy, storing them in a battery. A single unit saves more than 90 per cent of the yearly expenditure incurred on operating an ATM, which works out to Rs.1.44 lakh, half of the amount being accounted by air-conditioning," said Sabarinath Nair, marketing manager, Vortex.

Gramateller comes with a biometric touch pad to prevent fraud and tell villagers that their money is safe. It can also dispense soiled notes in the interiors where crisp currency notes are suspected of being fakes, Nair said.

Source: EconomicTimes

PSU banks consortium begins work on ordering ATMs

A consortium of public sector banks has begun putting out orders for supply of automated teller machines (ATMs)/cash dispensers.

Hitherto, these banks placed orders for purchase of ATMs on an individual basis.

About 40,000 ATMs are expected to be ordered by this consortium, with different banks assuming lead bank responsibility for the process, across different geographies in the country.

The installation, maintenance and management of services of such ATMs and cash dispensers will be done through a totally outsourced model.

In Madhya Pradesh

State Bank of India on Sunday has notified an all-India tender for installation of 3,893 cash dispersers in Madhya Pradesh.

SBI has called for the request for proposal on behalf of a consortium of banks, including itself, United Commercial Bank, Allahabad Bank and United Bank of India.

The rollout of the cash dispensers would be in urban, semi-urban and rural locations according to the requirements of each bank, the notification said.

The requirements are spread over two years - 2012-13 and 2013-14.

SBI alone will need 1,980 ATMs in this area (MP) during the two years.

VENDOR SPECIFICATIONS

The contract will cover provision of services for seven years.

Bidders who wish to participate in the request for proposal process (RFP) should have a minimum annual turnover of Rs 20 crore from ATM operations in India.

In off-site locations (sites away from the branch), vendors can set up ATMs in any site of their choice while sticking to the broad area specifications given by banks.

The specifications include a requirement for a disaster recovery centre and business continuity plans.

USER-FRIENDLY

The minimum availability of an ATM (uptime) for use by customers in a month has been mandated at 97 per cent in urban areas and 95 per cent in semi-urban and rural areas.

Penalties have also been prescribed for those vendors who fail to maintain the mandatory availability of ATMs services.

GAIN FOR BANKS

While banks are tight-lipped about the cost-advantage they have in outsourced ATMs model as against own ATMs, experts agree that reduction in ATM transactions-related costs has been a focus area of banks.

This happened particularly after the regulator forced banks to share their network - enabling customers of any bank to use any other bank's ATM.

Banks bear the fees charged for their customers using other banks' ATMs – and, therefore, are a shade prickly when this happens.

ICICI Bank, for instance, has stated sending a SMS immediately after any its customers uses a non-ICIC bank ATMs.

It promptly SMSes that it has 7,300 of its own ATMs !

It also offers information on the nearest ATM location through the registered mobile of a customer.

As of now, there are about 75,000 ATMS in the country out of which over 26,000 belong to the SBI group.

nagsridhu@thehindu.co.in

Allahabad bank to expand branches

COIMBATORE: Public Sector Allahabad Bank has set a target of adding 155 branches and 500 ATMs across the country this fiscal, besides a branch in Bangladesh, a top bank official said today.

Of this, three branches would be opened at Namakakal, Tirunelveli and Thanjavur in Tamil Nadu, which has 51 branches at present, Bank's Executive Director,M R Nayak told reporters after opening its 2,459th branch at Kalapatti in the city.

Having a branch in Hongkong and a representative office in China, the Bank is awaiting clearance for starting a branch in Bangladesh, he said, adding, there were also plans to strengthen Bank's presence in Chennai, Hyderabad, Punjab and Bangalore, to tap business potential by opening more branches.

Stating that the focus of business in Tamil Nadu would be on SME/ MSME, retail loans and agricultural loans, Nayak said the bank has a predominant presence in textile clusters, with over rs.250 crore business volume in Tirupur branch.

Source: EconomicTimes

Bank not at fault if ATM card misused

New Delhi: A person cannot claim damages from bank if he fails to immediately block his lost ATM card and money is unauthorisedly withdrawn by using the card, a district consumer forum has said.

It said the bank would have been liable if the transaction of withdrawal of money took place after blockage of the card.

A bench of Central Delhi District Consumer forum passed the order while dismissing a complaint filed by a Faridabad resident Deepa Singh alleging that bank is liable for the compensation as it allowed illegal withdrawal of money from her account after she lost her ATM.

"Singh was having the PIN number and without that PIN number, the ATM card could not have been used. First the money was withdrawn and only thereafter the bank was informed to block the card.

"The bank complied the instructions of the complainant. The bank would have been liable if transaction of withdrawal of the amount would have taken after the blockage of the card by it," the forum said.

The forum presided by its president B B Chaudhary also refused to pass any order against the bank for its failure to provide her video footage of the person who had used her ATM.

"The bank cannot be held liable merely because it could not provide the CCTV footage of the relevant time of the withdrawal of money. The CCTV is a machine and it may not function at a particular time," it said.

The forum further said that the PIN number of the ATM card was only with Singh and without it money could not have been withdrawn and the bank was told to block the card only after the amount was withdrawn.

Singh had submitted that at the time of issuance of card, the bank had assured her that if somebody would withdraw money from her account without her knowledge, it would provide her video clipping but in July 2010, the bank informed her that the camera was not working at the relevant time and video clippings could not be provided.

But the forum was not satisfied and dismissed her plea saying, "only card holder can be held responsible if the ATM card/Debit card is misused fraudulently."

Source: Financial Express

Syndicate Bank to open 200 ATMs soon

Syndicate Bank is planning to set up 200 ATMs in various parts of the country, according to its Executive Director, Mr M. Anjaneya Prasad.

Speaking after inaugurating the new premises of existing branch at Pathergatty here on Monday, Mr Prasad said the proposed ATMs would have advanced technology features such as biometric capabilities and touch-screen facilities.

Syndicate Bank now has over 2,550 branches and 1,100 ATMs spread across 574 centres across the country.

Mr Prasad also advised employees to get updated with the latest products and services of the bank so as to give the best customer service.

New accounts

There was a need to mobilise more number of new accounts, he added.

Syndicate Bank posted a net profit Rs 666 crore as against Rs 503 crore in the half-year ended September 30, 2011, marking a 32 per cent growth over the year-ago period.

The total business stood at Rs 2,55,286 crore, according to a release.

nagsridhu@thehindu.co.in

MasterCard Foundation, ILO enter into pact

The MasterCard Foundation and International Labour Organisation (ILO) have forged a five-year partnership to enhance global awareness among youth about challenges facing them in the world of work.

The Foundation, which has pledged $14.6 million for the Work4Youth partnership, will aid ILO in school-to-work transition surveys to be undertaken in 28 countries across five regions. The data and information generated by the surveys will be included in a series of analytical national, regional and global reports on youth employment.

A recent ILO report indicated that even though the absolute number of unemployed youth fell slightly since its peak in 2009 from 75.8 million to 75.1 million in late 2010, young people were struggling to find jobs or are giving up on finding work.

Ms Deepali Khanna, Director of Youth Learning for The MasterCard Foundation, said: “The partnership is a good example of how policy-makers, the private-sector, employers and educational institutions can engage with international organisations to promote the expansion of decent work opportunities for young women and men.”

The Toronto-based MasterCard Foundation advances microfinance and youth learning to promote financial inclusion and prosperity.

PNB installs Cash Deposit Machine in Ernakulam

To help customers speed up their transactions without waiting in the queue, Punjab National Bank has installed the first Cash Deposit Machine in Kerala at its Market Road Branch in Ernakulam district. Mr K.V. Rajesh, the Bank Circle Head, said the machine would accept currency notes in three denominations — Rs 100, Rs 500 and Rs 1,000, and customers can make up to two deposits through the machine in a day. The customer's account will be credited instantly and a receipt will be issued.

This is a customer-friendly machine and can be handled easily by the customers, he said. The Cash Deposit Machine would check the authenticity of the currency notes deposited before accepting the machine. The bank also launched a gift scheme for its ATM/Debit card holders. There are two types of gift schemes — one through manual response of the card users and automatic rewards for those who use the cards for shopping, utility bill payments and booking of various types of tickets.

Trend from cash to electronic payment is irreversible

‘Tomorrow will be a better day than today,' says Mr Amrish Rau in the course of a conversation with Business Line. That's the kind of statement that one likes to hear in these troubled times and a slowing economy. But the man who says this is neither the author of any self-help book nor an evangelist who exudes sunny optimism.

He happens to be Vice-President and Country Manager, First Data India. And when he explains what his business is, you know that the numbers back him and his bullishness.

First Data Corporation is a $10-billion US Company that specialises in processing electronic payments. Its business philosophy is to be wherever there is a transaction that is not cash-based.

It operates in India through two arms. There is First Data India which handles payments services business (card issuing, merchant alliance programs and ATM services). And there is ICICI Bank Merchant Services (IBMS) in which FDC has an 80 per cent stake (ICICI Bank has 20 per cent) which is engaged in the business of merchant acquisition, setting up point-of-sale (PoS) terminals.

Their joint venture with ICICI Bank completes 25 per cent of the Indian payments market.

Consumer spending is the core focus area for First Data.

But as Mr Amrish points out, it is not easy to go to a retailer and tell him that they (First Data) would like to install a PoS machine. A big bank and a recognised brand provide the entry point. That's where the partnership with ICICI Bank comes in.

Excerpts from an interview:

What does First Data do?

Let me explain what we do. When you swipe a card on a PoS machine at a merchant establishment, there is a waiting period for approval. At that time, we take the transaction through Visa/Mastercard to your card company and get the approval and then bring it back to the PoS machine – saying “Transaction approved”. That concept of running the transactions is where we make our money. We do that on PoS machines and on Web sites.

On the internet side, we do 50 per cent of all e-commerce transactions that happen in India. This is also in some sense creating an infrastructure in a growth market like India. That's what we do for a living.

The world over, banks are getting out of the space of merchant acquisition and last mile connectivity. Payment companies such as ours are coming into this area.

Why don't banks see an opportunity in this area?

It has something to do with money flows. I'll give you an example with some rough numbers.

Suppose you spend Rs 1,000 in a restaurant on your card, your bank gets to keep Rs 15 for the transaction.

The Visa and Mastercard cloud through which all transactions come, get to keep about Rs 1.5 out of the transaction.

And because we have put up the PoS terminals, the people and other infrastructure, we get to keep Rs 3.5 out of this.

Banks are more interested in the Rs 1,000 and in the Rs 15. They are not interested in the Rs 3.5.

So they are saying that they don't want to do this. And we are there to do this.

It is a classic win-win situation for all.

What kind of volumes do you do?

We do 180 million transactions per year.

We are growing at 20 per cent a year.

Based on the RBI data, there is somewhere around Rs 1,20,000 crore worth of purchases that happen on cards (debit and credit card). Our share in this is 25 per cent.

Where are these transactions happening?

Most of it is related to travel and tourism – through sites such as IRCTC, other travel related Web sites.

Is there any area still untapped?

Government payments, mutual funds/insurance payments - these are emerging sectors.

Internet commerce has grown on the back of a strong application than on the premise that it is a good thing to have.

Companies which have done well there are those that offer a compelling value-proposition.

You may not know where your nearest travel agent is but you know how to go to ‘Clear trip' or ‘Makemytrip' and book your tickets.

Is the slowdown in the economy affecting your volumes?

No. On the contrary, we are growing. Even in the US, where we are the biggest player, and even in a slowing economy, we are seeing growth in e-payments.

In India we are seeing 25–30 per cent growth in e-payments.

In e-commerce transactions, we are seeing 50 per cent growth year-on-year.

I am forecasting that this sort of growth will continue for at least the next five years.

The beautiful thing for us is that when we go to sleep, we know that tomorrow will be a better day than today.

That is guaranteed. Very few industries have that experience.

The trend from cash to electronic is irreversible.

People will reduce their use of cash and increase their use of plastic.

So even if the economy is slowing, the electronification of transactions will rise.

This is happening even in the US, which is the most mature, advanced market in the world.

So, there is no stopping this growth.

Where do you see the maximum growth?

Tier-2 towns are exploding. Places such as Pune, Jaipur, Goa and many other similar cities are booming.

We are not seeing that much growth in the Tier-3 places – but that's more due to bandwidth of the community.

We have just covered the metros and now are moving into Tier-2 towns.

vageesh@thehindu.co.in

Bank branch for ‘Gen Next'

Punjab National Bank appears to be going all out to woo young customers. It has launched a ‘Gen Next' branch in Lucknow. This branch will be equipped with WiFi services, cafeteria, book corner as well as several gadgets.

The branch will have an ATM, a pass book printing machine and a cheque and cash deposit machine. It will have a scanner facility for customers who wish to submit their loan application online. The bank plans to establish five such branches throughout the country over the next year.

PNB special savings account scheme

Aimed at disbursement of salary of Government school teachers, the Punjab National Bank has introduced a special savings account scheme — PNB Shikhak Saving Account scheme in Kerala.

The scheme will be a zero balance account with no charges. The teachers will be provided with free ATM/Debit cards and add-on-card, if required.

This will enable the teachers the benefit of multiple ATM card for use of their family members. Free personalised cheque books will also be issued.

For transfer of funds to other Bank accounts anywhere in the country, there will not be any charge for RTGS/NEFT, Mr K. V. Rajesh, Circle Head of the bank, said.

The bank will also provide Internet Banking, Mobile Banking and SMS alert facilities to the account holders. There will be concessions in interest rates for car/housing loans, locker rent and documentation/processing charges.

PNB opens ‘Gen Next’ branch to attract youth

The country’s second largest public-sector lender Punjab National Bank (PNB) on Saturday opened its ‘Gen Next’ branch here, aimed at providing hi-tech banking to the youth.

“In the youth bulge economy, attracting young customer is the need of the hour and in order to do so, the Gen Next Branch will provide Gen Next banking facilities,” PNB Chairman and Managing Director Mr K R Kamath said inaugurating the branch.

The branch is well-equipped for tech-savvy customers, and has WIFI premises, cafeteria, books corner and all the gadgets as per e-lobby. Further, it will be loaded with ATM, cheque deposit machine with provision for cash deposit, pass book printing machine, he said.

It will have scanner facility to help customers go for online submission of loan applications.

Mr Kamath said that this year five such branches would be opened in the country.

Earlier, he distributed around 501 rickshaws to rickshaw pullers under the bank’s financial inclusion programme.