Distressed Indian state-run banks are shutting down ATMs (automated teller machines) at a record pace to cut down costs.

In the last year, banks placed under the Reserve Bank of India's (RBI) prompt corrective action (PCA) scheme have shut as many as 1,635 ATMs as per RBI data. However, the total number of ATMs across the country have gone up by 107 from 2,07,813 to 2,07,920, signaling the rise of competitors taking over the market share to benefit from the 22 percent increase in cash withdrawals in the past year.

An increase in cash withdrawals was accounted for from an increase in economic activity in rural India.

The RBI has put 11 public sector banks under PCA scheme so far due to their deterioration in financials. Under the scheme, various restrictions are put on entering new lines of business, lending, orders cost and hiring of new employees.

CIBIL data shows that the share of state-run banks in commercial lending has been reduced to Rs 31.1 lakh crore in December 2017 from Rs 32 lakh crore in March 2016. On the other hand, the private sector grew from Rs 9.1 lakh crore to Rs 10.9 lakh crore in the same period.

7 out of the 11 banks put under PCA have cut down their ATMs. These include Central Bank of India, Allahabad Bank, Indian Overseas Bank, Bank of India, Corporation Bank, Bank of Maharashtra and UCO Bank, as per RBI data. IOB has made the most cuts and reduced the number of ATMs by 15 percent to 3,000 in April 2018 from 3,500 a year before.

Banks under PCA aren't the only ones shutting down ATMs. Canara Bank has shut down 7.6 percent of their ATMs, Bank of Baroda reduced 2,000, while scam-hit Punjab National Bank shut 1,000 of its ATMs.

Small finance banks and private banks, on the other hand, are rising and widening their coverage, although at a slower rate than before. Private banks added 7,500 ATMs in 2016-17, which is half of 15,714 ATMs they added in the prior year.

Meanwhile, the largest public sector bank, SBI added close to 500 ATMs in the past year, which others are hoping for customers to adapt to the digital channels of payments.