Cash Shortages Threaten ATMs in Smaller Cities Amid Bank Cash Routing Issues

Concerns Over ATM Cash Supply in Tier 2 and Tier 3 Cities

ATMs located in tier 2 and tier 3 cities are currently experiencing significant cash shortages, raising alarms about potential widespread shutdowns. Reports indicate that major banks are primarily directing cash to ATMs in tier 1 cities, leaving smaller urban areas underserved. The Confederation of ATM Industry (CATMi) has formally requested Rs 100 crore in compensation from the banking sector, highlighting their concerns to the Reserve Bank of India (RBI). They claim that the State Bank of India (SBI) is particularly at fault for this imbalance, as it manages cash replenishment for nearly half of its ATM network, which is heavily concentrated in metropolitan areas.

This situation has resulted in ATMs in smaller towns and cities running low on cash. SBI operates the largest ATM network in India, comprising around 65,000 machines. The industry has already incurred losses exceeding Rs 100 crore, prompting CATMi to seek reimbursement for these losses, as operators miss out on transaction and interchange fees when ATMs are offline. In a letter to SBI, CATMi expressed that operators have faced challenges in accessing cash from branches and currency chests since late December 2025, emphasizing that an ATM without cash leads to lost transactions.

Recent statistics reveal a decline in the total number of ATMs in India, dropping to approximately 251,000 in 2024-25 from over 253,000 the previous year. This decrease is primarily observed in off-site machines catering to rural and semi-urban regions. Additionally, CATMi has alerted the Indian Banks’ Association (IBA) about the potential disruption of ATM services due to insufficient cash for machine loading. According to the report, the projected cash requirement for ATMs was Rs 94,000 crore for March and April, but only Rs 61,000 crore was available in March and Rs 54,000 crore in April, as reported by a media outlet.