IDFC Bank mulls having no ATMs, free service at other machines

Mumbai: As it prepares to launch its banking services with motto to become "hatke bank", IDFC Bank is contemplating a low capex move of not having its own ATMs and making transactions at rivals' ATMs free for customers, a senior official said.

"We feel there is a saturation of ATMs in the market and even after having the machines, you spend on its maintenance. We are looking at not having a network of ATMs," its head of personal and business banking Naval Bir Kumar told PTI after the bank unveiled its logo last week.

He added that IDFC Bank customers may be allowed to use existing automated teller machines (ATMs) without any charges.

Kumar explained that the money a bank pays for installing and maintaining the ATMs from third parties works out almost the same as the commission or fees paid to other banks for a transaction.

He, however, added that no final decision has been taken on the matter as yet.

IDFC Bank is aiming to start personal banking operations by January.

At present, all the banks have invested in their own ATM networks and customers are charged for transacting at other lenders' ATMs after breaching a fixed number of free transactions a month.

Generally, a bank pays under Rs 20 to another bank for helping its customer carry out a transaction, but Kumar said it can be negotiated down.

The RBI has allowed operations of white-label ATMs, which are being run by non-banking entities, with an eye on generating fees.

At the event, its executive vice chairman and managing director Rajiv Lall had said its market surveys have shown a deep unhappiness among customers about banks and had stressed IDFC Bank's motto to be the different by becoming the "unbank" or "hatke bank".

Technology will play an important part in this journey of having a bank whose operations are different from those being offered at present, he had said.

Lall said the bank does not plan to offer higher rate of interest on saving deposits, as is being done by others like Kotak Mahindra Bank or Yes Bank.

It is formally launching services on October 1 with 23 branches, out of which 15 will be in rural areas, Lall had said.

By end of the year, it is planning to take the total branch network up to 60, with 40 in rural areas.

Kumar said the component of rural branches, being called 'Bharat Bank' at IDFC, will be higher than the regulatory prescription of 25 percent for the initial 12 to 18 months and will be gradually increased.