Govt, Private Banks Allowed To Charge Extra For ATM Cash Withdrawal From This Date
The RBI has permitted banks to increase fees for ATM transactions.. It has set a cap of Rs 21 per transaction.
The fees will be applicable when the customer has exhausted their free transaction limit.
Revised Transaction Fees
RBI has said that the change in fees from Rs 20 presently, will come into effect from Jan. 1, 2022.
The limit for free ATM transactions is 5 per month. However, this is applicable only if they use their bank’s ATMs and not that of other banks.
In case of transactions conducted from ATMs of other banks, the limit is set at 3 per month.
That applies to metro customers.
Non-metro customers have a higher cap of 5 transactions.
A committee led by the CEO of Indian Banks’ Association had recommended changes in ATM charges back in June 2019.
It suggested Rs 24 to be levied on customers per transaction.
Reason Behind Revisions
The revisions are being made to compensare banks which will have to pay higher interchange fees, which currently is Rs 15 to Rs 17 come August 1.
An interchange fee is something a merchant bank has to pay to the card-issuing bank every time a customer swipes their card in the ATM.
For non-financial transactions, the interchange rate has been increased from Rs 5 to Rs 6.
The RBI has said that this decision was made in light of rising costs of installing ATMs and their maintenance.
It is said that the hike in ATM charges will incentivise banks and ATM operators to penetrate semi-urban and rural markets.
An added benefit is that more ATMs in such regions could serve the financial inclusion agenda of the RBI and the govt.
The revisions have been received well as experts say that it was a long time coming.
The move could be the catalyst to ramp up the deployment of ATMs throughout the country.
This would also benefit customers and the economy at large since cash and digital payments are significant pillars driving economic growth.