The Reserve Bank of India recently authorised banks to raise ATM fees levied on customers after their free limits have been exhausted.
The central bank decided to compensate banks for the increased interchange fee and the general increase in ATM operational costs.
The RBI circular said, “The recommendations of the Committee have been comprehensively examined. It is also observed that the last change in interchange fee structure for ATM transactions was in August 2012, while the charges payable by customers were last revised in August 2014. A substantial time has thus elapsed since these fees were last changed.”
The Higher Interchange Fee And General Escalation In ATM Operational Costs
In India, private and public banks typically allow three to five free ATM transactions in urban cities and towns, with banks allowing up to five free ATM transactions in rural areas.
As a result, the central bank will compensate banks for the increased interchange fee and the general increase in ATM operational costs.
If you go over your monthly limit, the bank will charge you a small fee to keep the ATMs operational. The RBI has permitted banks to charge higher interchange fees as well as fees for non-financial transactions at ATMs.
The RBI has allowed banks to increase charges on ATM transactions beyond the free ATM transaction limit.
“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022,”
the RBI circular announced.
Unlimited Free ATM Transactions
Three private banks in the country provide their customers with unlimited free ATM transactions. These financial institutions are IndusInd Bank, IDBI Bank, and Citi Bank.
For all who are planning to open an account with IDBI, you may like to note that it offers free unlimited transactions at its ATMs and five free transactions at other ATMs, according to BankBazaar.
“Unlimited Free ATM Withdrawal with your IndusInd Bank Debit Card across any ATM in India,” the bank websites read.
IndusInd Bank also offers unlimited free ATM transactions.
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