Inter-Bank ATM Withdrawals may not be completely free now


Just 5 months back, RBI had announced that ATM customers will be allowed to withdraw money from any bank ATM of their choice with levying any extra charges.

Indian Bank ATM withdrawal

But citing logistics issue, the Indian Banks Association (IBA) has now put certain limits for doing transactions in banks other than the home bank.

Based on the information gathered over last 5 months, since the inter-bank withdrawals were introduced,

There were a small minority of users who withdrew very large sums on account of high card limits given by some banks to privileged customers.
At the other extreme, there were some customers who withdrew miniscule amounts, or made other kinds of inquiries. This created several logistics problems causing avoidable expenditure for banks at the cost of the common user. (source)

Now, I think it is a wise decision and probably should have taken when it was launched initially.

Basically inter-bank ATM withdrawal service should (thats what I think) be used in emergency cases when you are unable to carry out transactions in your Home bank ATMs.

It will be quite unfair on the home branch to offer unlimited ATM services to users from other branch.

Infact, the new rule that was announced put banks like ICICI and HDFC who had high number of ATMs in big disadvantage compared to other banks who had less number of ATM locations.

I think putting a limit to the transactions from outside-home bank ATMs helps both the Banks as well as their customers.

According to the new proposal made by Indian Banks Association (IBA),

The customer will be allowed to make 5 free transactions upto Rupees 10,000/- above which a charge of Rs. 20/- will be levied to the user. 

Like I mentioned earlier, it is a fair proposal and one that should help Consumers as well as banks equally!

What is your take on this new proposal?

  1. Apoorv gupta says

    Hi friends.
    First i would like to say 5 transaction of less than Rs10000 is a good scheme as it gives the initiate to other banks to setup their ATM’s which involve a substantial cost.
    A poor person or middle income family wont need to withdraw more than 5 times, and for the rich people they wont mind.
    1) Promotes bank to open more ATM’S which will also include the home ATM(i.e) if i am an SBI customer, even SBI would like to make some money out of this and will further open more ATMS, hence gradually people will withdraw from their respective ATM’s always which does not happen now always due to their non availablity.
    2) Saves the hastle to find the home ATM and thus reduce tracel and reduces pollution.
    3) If more ATM’S will open, further employment opportunities will be created for the security guard sitting outside.

    1) Even if a person withdraws money from other ATM’s and a fee of RS 20 is deducted, though it is shown in available balance, but it should be shown explicitly stating a fee of Rs 20 has been deducted as it will apprise the customers.
    2) If an ATM is open, it will gradually reduce the number of bank employees
    3) Many a times a fee needs to be paid which might be more than 50000. Atleast once a month an amount of more than 25000 should be allowed to withdraw.

    At the end ATM is for the people so why not make it more user friendly!!

  2. Neelam Chauhan says


  3. Srinivas Kishore says

    I like it…

  4. sachin says

    Hi friends..
    Iam having my account in HDFC Bank. I have drawn money for two three times in a month (may 2010) from other banks Atms.. I have been charged Rs.40/-..
    My transactions were below Rs.10,000/-..
    I have heard it is free but still i have been charged for it????

  5. Kamal Thakur says

    Well.. Thats justified. I was also thinking on the same lines. It must have been hard for those banks who have already spent a lot on creating such infrastructure.

  6. Sriram Vadlamani says

    It sucks, because we got used to it. As I have mentioned earlier, if the atm transacations are free no one will have any incentive to open new atm’s and thus the penetration will plateau.

    1. Arun Prabhudesai says

      Sriram, well said…and you pointed that out in your earlier article as well. There needs to be an incentive for banks to open new ATM centres…otherwise you will see ATM getting more and more crowded

      1. Jayshree says

        Well, it was observed that small amount withdrawals increased. Due to which banks are compelled to maintain a higher float – without any return!

        Pardon me, I think it is a justified move, although may not be an entirely a win-win situation.

  7. sharath says

    Customer when uses an ATM other than his own bank is due the fact that there isn’t one close by or the Machine isn’t responding.
    Search and drive around town to find customer ATM is a costly affair & also involve emissions.
    This sort of usage should be treated as access deficit scenario by the ATM network & the provider bank should be credited certain points.
    The points should be settled by the ATM network from time to time basis.
    The Customer is happy, Fuel spends come down & the environment issues are taken care to a certain extent.
    Let banks figure out as to how they barter in the access deficit points. They are good at that.

  8. vikram sethi says

    Its really a very wise decision taken by IBM. 5 transactions of Rs.10,000 in one month is enough in case of dealing with another bank’s ATM. There should be some limit and thinking of Big Disadvantage to Leading ATM Providers ICICI BANK AND HDFC Bank, Its a Flawless Step.

  9. Dheeraj Makkar says

    Yes, its a correct move to solve the plight of Home Banks and to make Banks with Less ATMs understand that they can’t use services of other banks for free.

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