The one-day disruption affected ATM uptime and cash availability across the four states, with intermittent service gaps reported as regular cash replenishment cycles were interrupted. Industry executives, however, said operations are expected to resume from Tuesday after several private sector banks agreed to renegotiate contracts and revise service fees, while discussions with other lenders continue.
Public sector banks, however, have so far stayed away from the negotiations, raising concerns that ATMs operated by state-owned lenders, particularly in tier-2 and tier-3 cities, where they have the largest footprint, could remain vulnerable if a resolution is not reached.
“The industry has reached an understanding with employees to resume full operations from Tuesday after some movement from private sector banks. While several private banks have accepted the need for higher payouts or are actively negotiating revised commercial terms, no public sector bank has yet agreed to reopen pricing discussions,” a senior executive at a cash logistics company said on condition of anonymity.
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The disruption underlines the mounting financial stress in India’s cash management ecosystem, which has been grappling with increases in labour expenses following state-wise minimum wage revisions, along with higher fuel prices. Industry executives estimate wage costs have surged 40-50% over the past year, while fuel costs have further squeezed already thin margins. Collective industry losses have crossed ?100 crore, and the industry is seeking recovery of these losses from the banks.
Cash logistics firms had been flagging the need for pricing revisions over the past several months, arguing that contracts signed years ago no longer reflected prevailing operating costs. The increase in service fees being negotiated varies across banks and depends on the terms of individual contracts .RBI Deputy Guv pushes for meaningful, fair grievance redressal
“The issue is not demand for cash or ATM usage. It is about the economics of servicing the network. Existing pricing models are completely misaligned with current operating costs, and unless contracts are revised, the sustainability of cash logistics operations will remain at risk,” another industry executive said.
The latest disruption follows repeated warnings by the ATM and cash logistics industry, which had last month alerted the RBI and State Bank of India about growing financial stress in the ATM ecosystem. The industry had warned that increasing operating costs, difficulties in cash availability and declining transaction volumes were pushing several ATM portfolios below viable levels.