As the population increases in urban areas, so does the demand for ATMs. When you own commercial real estate, renting it to banks for ATM installation is a great way to obtain a healthy return on your investment. Here is a detailed explanation.
The leasing rules for homes and companies are distinct from one another. For example, whereas renting a home has relatively low costs, renting a commercial space comes with substantial operational costs as well as vacancy concerns. Consequently, it is crucial to lease out the space in such a manner that it obtains consistent rentals to recoup the money you invested.
Renting a building
It is possible to rent out a building to other businesses, although it could be difficult to locate a renter. It involves plenty of background checks as well as other verifications, as well as hazards related to ongoing vacancies. Due of this, the bulk of commercial property owners nowadays decide to lease their assets to financial institutions rather than deal with the hassles of ownership.
The new property concept of renting out commercial space to banking institutions for the placement of automated teller machines (ATMs) is quickly gaining in places like Bangalore, Hyderabad, and Chennai.
What steps are involved in installing an ATM?
The general prerequisites for seeking an ATM installation over a commercial property are listed below.
A real estate agent or a licenced broker can also be contacted for more information about the process:
• Fill out an application to have an ATM installed at a non-banking financial institution (NBFC) or bank.
• Complete information about the property, like the location and any adjacent landmarks, should be included in the application.
• The institution would examine the idea, determine the demand and traffic in the area, plus process the application as necessary. Banks typically favour freehold homes without mortgages or outstanding debts.
• The applicant must provide any additional information which is necessary in the predetermined standard form when the application is authorised.
• A server room plus dish facility must also be provided by the landlord for network connectivity.
• You and the institution would sign a lease agreement relating to the property.
• The rent offered by banks varies from Rs. 60 to Rs. 200 for every square foot. Nevertheless, this may change depending on the current market rates if the ATM is located in an urban or rural area and the daily possible transaction volume.
Benefits of Hire a Space for ATM:
• Renting out space to a bank ATM is a good way to earn a fixed monthly revenue.
• The best business possibility for you to make up to 5 times more money.
• Zero capital expenditure
• Pay a small, refundable down payment to launch your business alongside reputable names.
How much area does an ATM need?
Before renting out the area for ATM installation, a landlord ought to be aware of the following: The rented property must have a surface area of 60 to 100 square feet. Class-B concrete should be utilized for the ceiling, and all of property’s residents must provide their approval.
What are the different leasing models?
White Label ATM and Franchise ATM are the two different types of ATM leasing models.
White Label ATM
None of the banks own White Label ATMs. They belong to the NBFCs. In 2011, the Reserve Bank of India (RBI) approved the opening of white-label ATMs by non-banking firms registered in India under the Companies Act.
With only a sponsor bank as well as a network provider, these non-banking organisations sign a “Service Level Agreement” which guarantees cash flow within ATMs. These ATMs are open to users from any bank, although there is a cost for the service. Such ATM transactions are all charged.
Brown Label ATM
The foundation of Brown Label ATM is the idea of cost-sharing or leasing the ATM operations to a different party. Although the sponsor bank provides cash management plus network connectivity, the service provider owns the ATM hardware. The sponsor bank’s logo can be found on the ATM. It is a financially sensible option for banks.
By acquiring an ATM franchise, you can make use of your business space in another manner. Tata Communications Payment Solutions Ltd. (TCPSL), in collaboration with Franchise India, has introduced this approach. However, locations with significant visibility and foot traffic are ideal for Franchise ATMs.
The price of installing an ATM
Monthly lease payments as well as a security deposit which may range from Rs 2 lakh to Rs 3 lakh to the bank are required to lease out your premises for ATM installation. These costs may vary based on the location, size, and number of ATMs placed.
After the lease, the deposit is refunded. The costs of site upkeep, which may be between Rs 25,000 and Rs 30,000, are your responsibility in an ATM franchise system because there are no monthly rentals.
How much you may charge for rent?
In the case of white-label ATMs, NBFCs that install the device might make between Rs 15,000 and Rs 25,000 as a minimum profit. But, when you select a franchise ATM system, there wouldn’t be any monthly rental fees. The amount of money earned would depend on how many transactions took place each day. Franchise ATM dealers allow up to Rs 15 in withdrawals and Rs 5 in non-financial operations.
For example, when there are 200 transactions per day, comprising 50 non-financial transactions plus 150 withdrawals, the overall revenue is Rs 2,500. Without accounting for all expenses, the landowner could make at least Rs 50,000 to Rs 60,000 each month.
What should be considered before renting a location for an ATM installation?
Before renting out the area for ATM installation, a landlord ought to be aware of the following:
• The leased property’s surface area ought to be between 60 and 100 square feet.
• Class-B concrete ought to be used for the ceiling, and each of the building’s residents must provide their approval.
• Additionally, the landlord must offer room for a server room as well as the set up of network connectivity on the roof.
• Prior to signing the lease, landlords must pay a security deposit of a maximum of Rs 3 lakh. The upkeep, operations, as well as security expenses must be paid by the landlord if they choose the franchise model.
How can I apply to banks for an installation of an ATM?
To send your application to the bank manager, use this template.
Make sure you enter all the necessary pertinent information:
[Name of the Bank]
[Address of the Bank]
Subject: Request to lease a building so that an ATM can be installed
This is to inform you that I am willing to lease my land so that your bank can set up an ATM here. In light of the foregoing, I hereby divulge my personal data as well as details regarding the property that I wish to lease for the aforementioned use.
Name of the applicant:
Phone number of the applicant:
Address of the applicant:
E-mail ID of the applicant:
Address of the property to be leased:
Year of construction:
Area in sq ft:
Proposed rental charges:
Distance from the main road:
Proposed security deposit:
I also declare that the property is free of encumbrances and that I have received no-objection certificates from the relevant authorities to install an ATM at the site. For your consideration, I’ve also attached pictures of the location where the ATM installation is planned in my proposal. Please consider my application.
Name of the applicant:
Signature of the applicant:
Mobile number of the applicant:
Your property is qualified for ATM installation when it meets the following criteria:
• The property must be located in an established commercial or residential area.
• The property’s surface size ought to be 60 to 100 square feet for ATM installation.
• For a B-set setup, the sealing must be built of concrete.
• The applicant must have a written application that has been signed by each resident of the building or a NOC authorising the set up of a B-set.
Rent your space process for ATM machine:
You must go to the relevant bank and submit an application to the branch manager if you want to hire out your building for a bank ATM. The bank officials will tour your property after they have assessed your proposal. You would be contacted by the bank for additional action if the bank authorities authorize your property.
Where to go to get an ATM installed in your building?
You can go to:
• Public Sector Banks
• Private Sector Banks
• Muthoot ATM
If you own a store or commercial space and intend to rent it to a bank, you should be aware of the aforementioned information. Not all commercial real estate is suitable for use as a bank. Typically, when a bank needs to rent out space, that particular bank posts an advertisement with the types of properties it is searching for. If your property fits the requirements, you could apply to the relevant bank with your application and the relevant property documents, like the title deed, sale deed, and NOC. The bank will gather the applications and publish a list of the applicants who have been shortlisted.