With a growing population, the requirement for ATMs across urban centres is on a surge. If you own a commercial property, you can easily get lucrative returns by renting out your property to banks. Check out the step-by-step guide to renting a commercial property for ATM installation, a hassle-free and safe renting option!
The residential and commercial leasing businesses are different from each other. For instance, while renting a home involves minimal expenses, commercial renting includes heavy operational overheads and high vacancy risks. Therefore, in a bid to regain the invested amount, it is imperative to lease out your space in a way that it receives steady rentals. Nowadays, most commercial property owners opt for the hassle-free renting option by leasing the property to banking institutions. Letting out commercial property to financial institutions for automated teller machine (ATM) installation has become the latest trend in real estate, and is fast catching up in cities such as Hyderabad, Bangalore, and Chennai, among others.
The general guidelines for applying for an ATM set-up on commercial property are listed below. However, one can also reach out to a registered broker or property agent to know about the process:
The rent offered by banks varies between Rs 60 per sq ft and Rs 200 per sq ft. However, this is subject to variation as per the prevailing market rates, whether the ATM is situated in an urban or a rural setting, and the number of potential transactions per day.
There are three types of ATM leasing models: White-Label ATM, Brown-Label ATM and Franchise ATM.
White Label ATMs are not owned by any bank. They are the property of NBFCs. In 2011, the Reserve Bank of India (RBI) permitted non-banking entities in India incorporated under the Companies Act to open white-label ATMs. These non-banking corporations sign a ‘Service Level Agreement’ with a sponsor bank and a network provider that affirms cash flow in the ATMs. Customers of any bank can use these ATMs, but they will have to pay a fee for using the service. All transactions through these ATMs are chargeable.
Brown Label ATM is based on the concept of sharing the cost or outsourcing the ATM operations to a third party. The service provider owns the ATM hardware but cash management and network connectivity are provided by the sponsor bank. The ATM machine contains the logo of the sponsor bank. It is a cost-effective solution for banks.
Another way for using your commercial space is by obtaining an ATM franchise. Tata Communications Payment Solutions Ltd (TCPSL) has launched this model, in alliance with Franchise India. Nonetheless, in the case of Franchise ATMs, areas with high popularity and footfall are more preferred.
“Leasing out your space for ATM installation will be accompanied by monthly rentals and you paying a security deposit to the bank that may vary from Rs 2 lakh to Rs 3 lakh depending on the location, space and number of ATMs installed. The deposit is refundable at the termination of the lease agreement. However, in an ATM franchise system, there will be no monthly rentals and you will have to bear the costs of site maintenance, which could range between Rs 25,000 and Rs 30,000”, shares Zakir Hussain, Property Agent, Topend Realty.
In the case of white-label ATMs, a minimum of Rs 15,000 to Rs 25,000 can be earned from NBFCs that set up the machine. However, if opting for a Franchise ATM system, there will be no monthly rental income. The income earned will be dependent on the number of daily transactions. Franchise ATM dealers avail of Rs 15 per cash withdrawal and Rs 5 per non-financial transaction. For instance, if there are 200 transactions a day, including 150 withdrawals and 50 non-financial transactions, the total amount earned is Rs 2,500. Overall, the landowner can make at least Rs 50,000 to Rs 60,000 per month, excluding all the costs incurred.
Here are a few things that a landlord should be aware of before leasing out the space for ATM installation:
Landlords have to pay a security deposit of up to Rs 3 lakh before signing the lease. If the landlord is opting for the franchise model, he or she needs to bear the maintenance, operations, and security costs.
Here is an application format that can be used while applying to banks for ATM installation:
To,
The Manager
[Name of the Bank]
[Address of the Bank]
Subject: Proposal to rent a property for the installation of an ATM
Dear sir/madam,
This is to inform you that I would like to lease my property for the installation of an ATM for your bank. With this in mind, I hereby share my personal information as well as information about the property that I intend to lease for the stated purpose.
Name of the applicant:
Address of the applicant:
Phone number of the applicant:
E-mail ID of the applicant:
Address of the property to be leased:
Area in sq ft:
Year of construction:
Distance from the main road:
Proposed rental charges:
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 in order to install an ATM at the site. I have also included photographs of the proposed location for the ATM installation in my application for your review. Please take my application into consideration.
Regards,
Name of the applicant:
Date:
Signature of the applicant:
Mobile number of the applicant:
You may follow this template to submit your application to the bank manager. Make sure to fill in all the necessary details of the property.
Frequently Asked Questions
A. Usually, ATM starts making money when it clocks at least 100 transactions per day. You could earn around Rs 25,000 per month from the bank that installs the teller machine.
A. Either fill out the application online through the website of banks or meet the bank officials personally.
A. You can contact bank manager directly to enquire about their requirements. Usually, banks give ads in newspapers if they are looking for space for ATM installation.
