Rules for non-bank ATMs

The Reserve Bank of India (RBI) today stipulated that non-bank entities wanting to establish automated teller machines — known as white label ATMs (WLAs) — must have a minimum net worth of Rs 100 crore.

It also set stiff targets in terms of how many such money dispensing machines need to be installed.

It may be recalled that the central bank had come out with draft norms on white label ATMs in February. Announcing the final guidelines today after seeking views from banks, public, ATM network operators and non-bank entities, the RBI said non-bank entities, known as white label ATM operators (WLAO), would have to maintain a net worth of Rs 100 crore at all times.

The apex bank said while the WLA operator was entitled to receive a fee from the banks for the use of ATM resources by the bank customers, they could not charge the customers directly for the use of WLAs. Further, the current guidelines on five free transactions in a month as applicable to bank customers for using other bank ATMs will be inclusive of the transactions effected at the WLAs.

While the authorisation for setting up a WLA operation will be initially for one year, the central bank set tough targets as regards the number of such machines that can be installed. Non-bank entities can choose from three schemes.

Under the first scheme, they will have to establish at least 1,000 WLAs in the first year. In the next year, the number will have to be at least twice those established in the first year. In the third year, it will have to be three times the number set up in the preceding year. For every three WLAs installed in tier III to VI centres, they will be allowed to establish one outlet in tier I and II centres.

According to the second scheme, a minimum of 5,000 WLAs will have to be installed every year for three years. Under the third scheme, the entity will have to set up at least 25,000 WLAs in the first year and at least another 25,000 in the next two years.

At present, only banks are permitted to set up ATMs.

According to the RBI, though there has been a 23-25 per cent year-on-year growth in the number of ATMs (over 90,000 now), they have been largely been deployed in Tier I and II centres.

Tax relief for more services

Fourteen more services have been put on the negative list for the purpose of taxes as the government streamlines the administrative procedures of this vital revenue source in its bid to usher in a goods and service tax regime in the country.

The negative list includes those services that will not pay the 12 per cent levy. The new entrants to the roster that take the total list to 38 include advocates serving entities with a turnover of up to Rs 10 lakh, and libraries and entities providing public conveniences. The new negative tax regime will come into effect from next month.

According to the guidance note on the implementation of the negative list of service tax released by finance minister Pranab Mukherjee today, the entities providing merger and acquisition services, too, will be kept out of the ambit of the tax net.

“The new approach to taxation of services is intended to take the country and the economy a step closer towards the introduction of goods and service tax,” Mukherjee said while releasing a 107-page book — Taxation of service: An Education Guide.

Mukherjee said that with the expansion of the service tax base, it would be possible for “the Central Board of Excise and Customs to exceed the collection target of Rs 1.24 lakh crore in the current fiscal”.

The government has collected Rs 97,000 crore by way of service tax in the last financial year. For the current year, the government has hiked the service tax rate by 2 per cent to 12 per cent.

According to the service tax guide, the 14 new services, which will be exempted from payment of tax include services provided to the government, local authorities or a government authority for the repair and maintenance of an aircraft.

It said services provided by way of public convenience such as provision of facilities of bathrooms, washrooms, urinals or toilets would be on the list.

The other services, which would be exempted from tax, include auxiliary educational services and renting of immovable property provided by educational institutions in respect of education.