Why ATM Numbers Are Falling in India - And Why It Makes Sense

A couple of years ago, a visit to a small temple village in Maharashtra was quietly eye-opening. From flower sellers to tea stalls, almost everyone accepted digital payments. Cash was optional. ATMs were rare and mostly unused.

That memory came back while looking at recent RBI data. India is not just using less cash. It is also slowly dismantling the physical infrastructure built to dispense it.

ATM Numbers Are Falling, But This Is Not Sudden

According to RBI data, the total number of ATMs in India fell from 2,53,416 to 2,51,057 in FY25. That is a net shutdown of nearly 2,400 ATMs in a single year.

At first glance, this looks like a sharp break. But the reality is more interesting. FY25 was not the start of the decline. It was the point where a long-running trend finally turned negative.

RBI data over the last decade shows three clear phases in India’s ATM journey:

• 2014 to 2019: Aggressive expansion as banks pushed financial access and cash availability.
• 2020 to 2022: Growth slowed sharply. New ATM additions barely kept pace with closures.
• 2022 onwards: Net reductions became the norm, led largely by private sector banks.

In fact, while public sector banks had already slowed additions years earlier, private sector banks began actively cutting ATMs after usage dropped and costs rose. FY25 merely confirmed what had been building quietly for years.

Private Banks Are Leading the Pullback

The latest year makes the trend clearer. In FY25, private sector banks reduced offsite ATMs from 79,884 to 77,117. Public sector banks saw a much smaller decline.

This split matters. Private banks are usually quicker to respond to cost and usage data. When they pull back first, it signals that the economics of ATMs are no longer attractive.

This does not mean cash has disappeared. It simply means banks are becoming selective about where cash access is genuinely needed.

Interestingly, while bank-owned ATMs are shrinking, white-label ATMs continue to expand in specific rural and semi-urban pockets where digital alternatives are still limited.

Digital Payments Changed Everyday Behaviour

The shift away from ATMs did not happen overnight. It built up gradually with the rise of UPI and mobile payments.

Digital payments won on everyday practicality:

• Convenience: No need to search for an ATM or carry cash.
• Speed: Payments happen instantly.
• Safety: No cash handling, counting, or storage.

Groceries, transport, utilities, and even small vendors moved digital. When people stop withdrawing cash regularly, ATM footfall drops. When footfall drops, the business case weakens.

The Cost Problem Behind ATMs

ATMs were originally meant to reduce pressure on bank branches. Over time, they became expensive assets, especially offsite machines.

Each ATM carries recurring costs:

• Rent for location
• Security and surveillance
• Cash loading and logistics
• Maintenance and downtime

To recover these costs, banks introduced withdrawal limits and fees. For customers, this meant paying extra for accessing their own money. For banks, ATMs slowly turned from convenience tools into operational liabilities.

Digital payments offered a cheaper, scalable alternative.

Why Bank Branches Are Still Growing

One contrast stands out. While ATM numbers are falling, bank branches continue to grow.

The reason is simple. Branches provide trust, problem-solving, and human interaction. ATMs do not. Machines survive purely on cost efficiency and usage.

On cost, convenience, speed, and safety, digital payments now outperform ATMs in most urban and semi-urban settings.

The Bigger Lesson from the ATM Decline

Any service that becomes expensive and cumbersome eventually loses relevance.

ATMs expanded rapidly when cash usage was high. They stagnated when usage slowed. They are now shrinking because better alternatives exist.

This is not financial exclusion. It is adaptation. Consumer behaviour changed first. Infrastructure followed.

Digital payments are winning because they solve real problems. The shrinking ATM network is simply aligning with that reality.

Key Takeaways

• India’s ATM decline is the result of a decade-long shift, not a one-year shock.
• ATM expansion peaked before 2020 and stagnated well before FY25.
• Private sector banks are leading ATM reductions due to cost and usage pressure.
• UPI-based payments reduced the need for frequent cash withdrawals.
• ATMs are becoming selective infrastructure rather than mass-scale networks.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice.