The bank has attributed this to a shift in customer behaviour from cash to electronic payments.

According to Paresh Sukthankar, deputy MD, HDFC Bank, customers who were earlier using their debit cards only for ATM withdrawals are now using them for transactions at shops. "In terms of teller transactions at branches as well as ATMs, we have seen a reduction or flattening out in those channels," he said. According to Sukthankar, the bank took advantage of this change in customer behaviour to close down a few ATMs and now plans to shift them to other centres where they are likely to be used.

As of March 31, 2017, the bank's distribution network was at 4,715 branches and 12,260 ATMs in 2,657 centres. At the end of the first quarter, the number was 4,727 branches and 12,220 ATMs - a reduction of 40 machines.

ICICI Bank too, has seen its ATM network shrink by nearly 700 ATMs from its peak level. However, bank officials said that these machines were brown label ATMs — those owned and managed by service providers but display the bank's brand — owned by a service provider. Following the termination of an agreements with a service provider, the ATMs were converted into white-label ATMs — managed by the service providers in their own names — by the service provider.

The industry, however, continues to increase the number of machines, although at a much smaller pace. Since December 2016, the total number of ATMs has increased by 2,616 to 2,08,476 ATMs. But the story is quite different in while label ATMs. According to Loney Antony, MD, Hitachi Payment Services, the white label ATM business is one staring at closure. Hitachi has almost halved the size of its white-label ATMs from 1,500.