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Banks without ATMs can now tie up with bigger banks

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ATMThe Reserve Bank of India (RBI) has permitted banks without ATM network to issue debit cards in tie-up with a bank that has its own network.

Co-operative banks have also been allowed to issue debit cards with a bigger bank as a sponsor.

RBI has also mandated guidelines to become sub-member of the National Financial Switch (NFS) for carrying out such transactions.

Banks are required to fulfill the following criteria for becoming a sub-member of NFS network – Core Banking Solution (CBS) fully implemented:

*Licence for conducting banking business.
* from sponsor bank (a bank having ATM network connectivity).
*Connectivity with National Payment Corporation of India (NPCI).

“As a precursor to moving towards a less-cash economy, it is necessary to inculcate the habit of using electronic payment channels among bank customers. With this in view, RBI has decided to permit co-operative banks which are CBS enabled, to issue ATM cards/ATM-cum-debit cards in tie-up with a sponsor bank,” the central bank said in a notification.

Such banks, being sub-members of NFS, are required to fulfill the risk management requirements prescribed by the sponsor bank and meet expenses devolving on them under the agreement with the sponsor bank.

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