The scheduled commercial banks have been permitted by the banking regulator, RBI to open offsite ATMs without prior approval.

The branch authorization policy that required banks to have a medium-term plan in respect of branch and ATM expansion has been modified by the RBI. Earlier the banks were required to apply for a branch license in the beginning of the fiscal and thereby secured approval for new branches on the basis of their assessment of the annual plan.

Managing Director of NCR Corporation India, Pradeep Sen said, "This gives banks the flexibility to relocate ATMs based on transaction volumes and need. It is a great step in improving ATM channel penetration and rapid expansion. ATMs would be in great demand as customers would like to avoid queues in the bank and with the recent announcement of no charge for using other ATMs, customers will be motivated to use it more often."

However in the current phase, small and mid-sized banks are expected to slowdown their ATM expansion plans because of the free usage of third party ATM allowed by the RBI from April 1st, 2009. The revenue generated from the interchange fee does not seem to be attracted to the banks any more.

During its annual monetary policy announcement, RBI said that the performance of the Payment and Settlement Systems Act, 2007 has taken the issuance of prepaid payment instruments system under its regulatory control.

Earlier the RBI has drafted the guidelines for issuance and operation of these instruments in the public domain for wider propagation and feedback.

RBI has permitted banks that fulfill certain eligibility criteria to issue all types of prepaid payment instruments. Also the eligible non-bank entities such as NBFCs are allowed to issue semi-closed instruments.

Pre-paid payment instruments are instruments that have some store value on them and its holder can make purchases against this value. The value stored on these instruments represents the value paid for by the holder by any means.