Why ATMs in small towns, cities are running dry
What's the story
The Confederation of ATM Industry (CATMi) has warned that ATMs in tier 2 and tier 3 cities are facing severe cash shortages. The problem stems from State Bank of India (SBI), as it continues to disproportionately allocate cash to ATMs in tier 1 cities. This has left smaller cities and towns short on cash, potentially leading to widespread ATM shutdowns.
Bank impact
SBI's cash allocation for ATMs
SBI, which operates India's largest ATM network with some 65,000 machines, directly manages cash replenishment for about half of its network. However, this is mostly in metro areas. The issue is particularly bad at SBI as most cash is being directed to tier 1 locations, leaving smaller cities and towns short on cash. This has affected consumers in underserved areas.
Financial losses
CATMi demands compensation from banking industry
CATMi has sought a ₹100 crore compensation from the banking industry. The request comes as operators lose transaction and interchange fee income when machines remain offline due to cash shortages. CATMi has asked SBI to resolve the issue by June 20, warning that many ATM portfolios are already operating below viability and outages could escalate if the situation persists.
Operational challenges
Rising costs and declining usage
The ATM industry is also grappling with rising costs and declining usage. State-level minimum wage revisions of up to 60% and higher fuel prices have increased operating expenses. Meanwhile, monthly ATM withdrawals have dropped from 570 million in January 2023 to 439.5 million by September 2025. Cash availability has become a systemic concern, with operators struggling to draw cash from branches and currency chests across several states since late December 2025.
Network impact
Number of ATMs in India
The number of ATMs in India has declined from over 253,000 a year ago to around 251,000 in 2024-25. The decline is mainly seen in off-site machines catering to rural and semi-urban areas. CATMi has also warned the Indian Banks' Association (IBA) that ATM services could be disrupted due to a shortage of cash for machine loading.