ICICI may spin off ATMs, sales points

18 Mar 2009 Evaluate

The country’s second-largest lender, ICICI Bank, is looking at setting up a new entity to house its automated teller machines (ATMs) and point-of-sale (PoS) terminals, which accept credit and debit card payments. The bank has sought bids from banking technology companies and private equity players for participating in the proposed entity.

This is the first time that an Indian bank is planning to transfer its ATMs and PoS assets to a separate company. ICICI Bank has the second-largest ATM network that has more than 4,000 machines, and the largest PoS network with over two lakh terminals.

According to sources, Visa, FSS, Total Systems Services, KKR-owned First Data Corporation, Blackstone-CMS joint venture, Venture Infotek and a few private equity investors have shown interest. Sources said there was a lot of interest in partnering ICICI Bank as payment is an area where many global companies are trying to get a foothold. From April, banks will have to allow customers access to their accounts through any ATM in India. Non-customer transaction costs are likely to be netted by banks among themselves.Banks should look at deals like this since ATM management is not really a core-banking activity. A separate unit, which specialises in installing and managing ATMs, will be able to deploy new machines at a much faster rate. Although India has over 35,000 ATMs, it is still way behind China, which has over 1.3 lakh machines. Many banks today have an arrangement whereby ATMs are sourced from other companies, with banks paying a rent for the service. What ICICI is planning is very different: it intends to set up a new company and rope in other stakeholders.

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