Update: We have been getting many calls and emails stating that “ATM usage for home bank is still free. However, various media reports suggest that it is capped at 5 for Metro cities. On the other hand, RBI circular is slightly confusing as well. We are trying to get confirmation on this – Please take this report with a pinch of salt till we get authentic clarification”
The new RBI policy regarding ATM usages would be applicable effective November 1st, which effectively curtails free ATM usage.
As per the new policy, which was released on Oct, 10th, users can use ATM from their bank only for 5 times a month, and ATMs of other banks for 3 times; beyond which Rs 20 per transaction would be charged for both cash withdrawals and other activities such as balance enquiry and mini-statement.
As of now, this policy will be application to bank account holders of 6 metros: Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore.
This new policy was announced by RBI is August, when it issued the notification: “Taking into account the high density of ATMs, bank branches and alternate modes of payment available to customers, the number of mandatory free ATM transactions for savings bank account customers at other banks’ ATMs is reduced from the present 5 to 3 transactions per month (inclusive of both financial and non-financial transactions)”
We had speculated about such norms way back in January, which has now being officially implemented.
In places other than these metros, bank account holders can use ATMs of their own bank free of charge, meanwhile other bank’s ATM will have the 5 free transactions rule as before. But considering the ‘woes’ of Indian Banks’ Association, which had pleaded to RBI to curtail free ATM usage considering high expenditure in maintaining ATM infrastructure, this new guidelines will be imposed on other Indian cities by next year.
However, RBI has made clear that the rule of 3 free transactions for using other bank’s ATM is left to the specific banks, and they can alter this rule as per their internal policies. For example, in case a SBI customer maintains a deposit of Rs 1 lakh in his savings account, can use other bank’s ATM free of charge, unlimited number of times.
Another exception is that of Bank of Baroda, which has issued a statement that their customers won’t be charged for using their bank’s ATM (which is capped to 5 free transactions as per recent update). However, using other bank’s ATM is free till 3 transactions.
All the banks will put up notices in their ATM kiosks and branches to inform about their customized ATM policy.
Now, there remains some ambiguity in the overall policy.
For example, say a person uses some other’s bank’s ATM for 3 times in a metropolitan area, then visits a rural town, and then again use some other bank’s ATM. Will he be charged Rs 20, considering that he is from metropolitan area and has already used the free 3 ATM usages. But, the fourth usage in a rural area, where RBI has given 5 free ATM usages for other bank’s ATM.
This is a flawed and anti-customer policy, which needs some serious debate. Banks do charge annual/monthly ATM maintenance fee, and this additional charges of using one’s own bank’s ATM beyond 5 usages is absurd to say the least. The additional charges should be borne by the both the banks – the one whose account holder uses the ATM and the one whose ATM is being used, and leave the customer alone from this debacle of sharing ATM usage costs.
We will keep you updated about this news, as more details come in.
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