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The Cabinet on Wednesday permitted 100 per cent foreign direct investment (FDI) under the automatic route for white label ATM operations, a move that is aimed at promoting financial inclusion.
"This decision will ease and expedite foreign investment inflows in the activity and thus give a fillip to the government's effort to promote financial inclusion in the country, including the Pradhan Mantri Jan Dhan Yojna," an official statement said.
The decision was taken in the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here.
It is expected that consequent to ease of investing in India, adequate funds would be available in white label ATM operations, it said.
"This would help in government's objective of enhancing ATM networks in semi-urban and rural areas," it said, adding that participation of foreign investors in the sector will contribute to furthering financial inclusion.
Till date, foreign investment in while label ATM operations (WLAO) was allowed through the government approval route.
This required some processing time and projects were delayed, dissuading investors from investing in such critical areas.
White labeled ATMs are set up by private non-bank companies that own and operate their own brand of ATMs.
The companies seeking to set up such ATMs would have to follow certain conditions. Any non-bank entity intending to set up WLAs should have a minimum net worth of Rs 100 crore as per the latest financial year's audited balance sheet, which is to be maintained at all times, it said.
It also said that in case the entity is engaged in any other 18 Non-Banking Finance Companies (NBFC) activities, then the foreign investment in the company setting up WLA shall also have to comply with minimum capitalisation norms for foreign investments in NBFC activities.
White label ATM operators in the country include Srei Infrastructure Finance Ltd, Muthoot Finance and Vakrangee Software.
Currently, there are over 1.82 lakh ATMs operated by 54 public, private and foreign banks in the country. In 2014-15, FDI into the country increased by 27 per cent to USD 30.93 billion.
When asked whether the Cabinet took up the proposal to permit manufacturing companies to sell products directly online, Finance Minister Arun Jaitley said that it was not taken up.