ATMs are popular, very popular and the reason is obviously that it makes it super easy for any individual to withdraw cash any time they want. But the main reason is also because ATM transactions are free!
But looks like very soon you may be levied fees next time you withdraw cash from you nearby ATM center. According to an ET article, RBI deputy governor has commented that RBI will not have any issues if Banks charge a reasonable amount to customers for using ATM machines.
Though none of the banks have officially made such a request, Banks have been unhappy with RBI’s directive that they should provide 24X7 armed security at each ATM centres. This directive from RBI came in the wake of brutal attack that happened on a woman inside an ATM of Corporation Bank in Bangalore in November of last year.
Banks have argued that it is unfeasible to provide 24 hour security at all ATM centers citing the fact that Banks do not levy any charges for ATM transactions, and providing 24X7 security will be financially unviable and will incur losses to Banks.
Repercussions?
If at all ATM charges come into force, there are sure to be lot of repercussions – Firstly in our view ATMs are integral part of banking for customers. Many people open accounts with Banks after seeing whether they have ATMs in their vicinity. For Banks it is an important channel for customer acquisition.
We think that even though Banks do not make any money, they do avail lot of indirect benefits.
If ATM charges come into force, we may start seeing long queues at tellers and banks will obviously need to increase their staff that will incur extra costs. In addition to this, bank also saves lot of paperwork, cheque book and other printing costs due to customer using ATMs. However, if ATMs become paid, banks are bound to have increased costs in other areas.
Also, as many may think, ATM transactions do not come completely free. Many banks like SBI already charge 100 rupees as annual maintenance fee to their customers. Along with it, banks also take yearly debit card charges as well.
While on one hand RBI talks about financial inclusion and easy banking, policies like these are sure to attract customers wrath.
In our view, Bank should not be allowed to charge fees for ATM transactions, however reasonable the fees may be.
Would love to hear our reader’s views on this – Do share your comments!
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I hope its not Raghuram? Charges Charges….Inflation….Poor Customer Service…….Awesome Chances To Earn Money From Banks…..Do Banks Take ATM’s on rent…..I would start an ATM Renting Business….Would setup a huge mall to include all Bank ATM’s there…..Would Be Happy Even If Banks Share 30% Profit With Me :) :P
If we look at the issue purely from cost point of view, what is a ATM? Its a box filled with electronics and connected to banks. Once installed, it runs only on electricity just like a TV. (Of course it costs to maintain but just like any equipment) Then why banks look at it as a money making instrument? Imagine a world with out ATMs. The banks would have employed many ppl in cash counters to service their customers. With ATMs, the cost of servicing their customers went down. Instead of looking at ATM as a cost saving equipment, how come banks think of charging ppl?
In fact Banks should not have their own ATMs. RBI should own all ATMs and allow any account holder (regardless of which Bank) to use it free of charge. Based on the transactions, RBI should charge individual banks the cost of maintaining the boxes. I never liked the idea of SBI charging HDFC account holders for using “its ATM” vice versa. Instead of RBI asking Banks to provide better ATM services to customers, it should provide the ATMs and let Banks pay the cost.
Just my two paisa :)