Context:

• The Reserve Bank of India (RBI) recently authorized non-bank companies to establish, own, and operate White Label ATMs (WLAs) in India. This measure improves ATM accessibility in Tier III to VI centers. 

What are White Label ATMs (WLAs)?

• They are the machines established, owned, and operated by non-bank entities. Non-bank entities incorporated in India under the Companies Act 1956 are allowed to operate WLAs.

Operation of WLAs:

• Services offered:  WLA allows customers of any bank to withdraw funds and also offer other services such as bill payment and cash deposit services. 
• Value Added Services: Services like mobile recharge, energy bill payments are also provided.
  • In return, WLA operators charge fees to the card-issuing bank for providing the facility to bank customers.
• Operating Entities: A WLA operator operates through a lending bank, a sponsor bank that manages settlements, and an ATM network provider like NPCI. 

Benefits of WLAs

•  Banks benefit from this because it eliminates the need for a large staff/office (in comparison to a system without ATMs). It reduces their branch’s operational costs. 

Limitations of White Label ATMs:

• Lengthy dispute resolution: In the event of a failed transaction, the WLA operator, the WLA operator’s sponsor bank, and the customer’s bank are all parties to the dispute resolution procedure. As a result, it’s possible that the resolution will take a while.
• Restricted number of free transactions: The cost issue may discourage customers, as they will have to bear a fee for using White Label ATMs, since these ATMs only allow a restricted number of free transactions. 

News Source: pib

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