Mumbai: The Confederation of ATM Industry (CATMi) has sought compensation of ₹100 crore from the banking industry while flagging concerns to the Reserve Bank of India (RBI) that State Bank of India (SBI) is disproportionately routing cash to ATMs in tier 1 cities, leading to shortages in tier 2 and tier 3 centres and raising the risk of widespread shutdowns.At a June 5 meeting with the RBI and SBI, ATM operators said the issue is concentrated at SBI, which runs India's largest ATM network of about 65,000 machines. While the bank directly manages cash replenishment for roughly half its network, largely in metro locations, machines in smaller cities and towns have been left short of cash, affecting consumers in underserved areas."The issue is specific to SBI. There is a real currency shortage-while smaller banks are managing, SBI has been caught in the wrong corner," said the CEO of an ATM company, who did not wish to be identified. "Most cash is being channelled to tier 1 locations, leaving the rest of the network under-supplied."Industry losses have crossed ₹100 crore, with CATMi seeking recovery of these costs as operators lose transaction and interchange fee income when machines remain offline.CATMi has asked SBI to provide a resolution by June 20, warning that several ATM portfolios are already operating below viability and that outages could escalate if the situation persists.Operators say the stress is compounded by rising costs and falling usage. State-level minimum wage revisions of up to 60% and higher fuel prices have pushed up operating expenses, while monthly ATM withdrawals have declined to 439.5 million by September 2025 from 570 million in January 2023.Cash availability has also emerged as a systemic concern. "Since late December 2025, operators have struggled to draw cash from branches and currency chests across several states," CATMi said in a letter to SBI, noting that an unloaded ATM results in a lost transaction.The industry body warned that the ecosystem is under "acute strain" and flagged the collapse of AGS Transact-which defaulted on nearly ₹600 crore in bank dues- as a cautionary example. The number of ATMs in India fell to about 251,000 in 2024 25 from more than 253,000 a year earlier, with the decline concentrated in off site machines serving rural and semi urban areas.