New Delhi: The Confederation of ATM Industry (CATMi) has sought Rs 100 crore as “compensation” from India’s biggest banker, SBI, saying the state-owned bank did not place adequate cash stocks in its ATM networks, leading to losses. The Economic Times reports that CATMi’s communication, during a meeting on Friday (June 5), with the SBI and the banking regulator RBI, included a reminder that the ATM industry is especially stressed on account of cash shortages in machines located in small towns.“State Bank of India (SBI) is disproportionately routing cash to ATMs in tier 1 cities, leading to shortages in tier 2 and tier 3 centres and raising the risk of widespread shutdowns,” reports the Economic Times, citing CATMi.Late last week, CATMi had written to the Indian Banks’ Association (IBA), flagging cash shortages in ATM machines, reports NDTV. That communication had stressed that ATMs were receiving barely 55-65% of the required cash.The development comes even as, since 2022, the cash withdrawal charges at bank ATMs have been roughly Rs 20-28 per transaction beyond the free limits for customers (inlcuding a GST of 18%), after their free limits are exhausted.It also comes despite a three-fold hike in the availability of cash as a whole in the banking system. Cash availability has risen from about Rs 13 lakh crore in FY17 to over Rs 41 lakh crore in FY26 as per the NDTV report, but digital transactions have deprioritised ATMs. In that context, the higher ATM use charges (known as interchange charges within the banking sector) have not translated into more ATM-level income.What customers pay for cash withdrawals or for checking their balance at ATMs is routed, via banks, to service providers to cover their costs. This system is increasingly under pressure due to digital transactions rising and costs of maintaining and operating ATM centres also rising. According to CATMi, if cash availability at ATMs is further under stress, they lose out on interchange charges.The situation is worsened by the decline in the number of ATMs available across the country, compounded by banks struggling to provide the security and services that are required at each cash machine by RBI. The number of ATMs in India fell to about 2,51,000 in 2024-25 from more than 2,53,000 a year earlier, reports Economic Times.The fall in ATMs began to speed up in the post-demonetisation years, with, for example, the Railways’ tender for machines at stations finding few takers exactly a year later. ATMs are a source of revenue for institutions such as the Railways, and it attempted to change the norms to encourage more banks to set up cash centres at railway stations. CATMi had in December 2018 also raised the issue of higher compliance costs causing stress to the sector.The Reserve Bank of India (RBI) raised the ATM transaction fee from Rs 21 to Rs 23 (maximum limit) starting May 2025. The ATM service provider AGS Transact Technologies defaulted on Rs 389 million repayments to debtors in 2025, which the CATMi letter to SBI highlights as a “warning” of the crisis in the ATM industry.Customers will continue to be entitled to five free transactions (both financial and non-financial) each month from their own bank’s ATMs, informed the central bank. They can also make free transactions at other banks’ ATMs –three in metro cities and five in non-metro areas.CATMi says that as the largest banking player, the losses of Rs 100 crore should be compensated by SBI.Following the 2018 December concerns expressed by the ATM industry on the compliance costs, which it had said would lead to the closure of half the country’s ATMs, it had also said, in December 2021, that banks were barely supplying “30%” of the cash ATMs required, the Hindu reported.