Cabinet allows 100 per cent FDI under automatic route for white label ATM

In Banking and Finance
September 9, 2015

In order to promote Financial Inclusion, the Union Cabinet has permitted 100 per cent foreign direct investment (FDI) under the automatic route for white label ATM operations. The decision was taken in the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi. Till date, foreign investment in while label ATM operations (WLAO) was allowed through the government approval route. This required some processing time and projects were delayed.

White labeled ATMs are set up by private non-bank companies that own and operate their own brand of ATMs. White label ATM operators in the country include Srei Infrastructure Finance Ltd, Muthoot Finance and Vakrangee Software.

The eligibility criteria for WLA Operators

The Memorandum of Association (MOA) of the applicant entity must cover the proposed activity of operating WLAs.
In case of any FDI in the applicant entity, necessary approval from the competent authority as required under the policy notified by Department of Industrial Policy and Promotion (DIPP) under the consolidated policy on FDI and regulations framed under the Foreign Exchange Management Act (FEMA) must be submitted while seeking authorization.
Non-bank entities must have net worth of at least Rs 100 crore as per the last audited balance sheet.
The net worth of at least Rs 100 crore has to be maintained at all times.

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What are Brown Label ATMs?

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‘Brown label’ ATMs are those ATMs where hardware and the lease of the ATM machine is owned by a service provider, but cash management and connectivity to banking networks is provided by a sponsor bank whose brand is used on the ATM.