Mumbai: The Reserve Bank of India (RBI) announced some major changes related to charges for cash and non-cash transactions at Automated Teller Machines (ATMs) last month. These changes apply to all public sector banks, private banks, foreign banks, regional rural banks, and co-operative banks. Read on to know what are these changes, and how will they put additional financial burden on you.
Interchange fee hiked
The RBI has allowed banks to increase interchange fees per transaction from Rs 15 to Rs 17 for financial transactions (Cash withdrawal, transfer of funds, etc) and from Rs 5 to Rs 6 for non-financial transactions (PIN change, cheque book request, mini statement, etc). According to the notification, this change will come into effect from August 1, 2021. ‘Interchange Fee’ is related to charges levied by one bank on another bank when a customer uses an ATM run by other-bank (e.g. SBI customer using non-SBI ATM).
Charges levied on bank customers using ATMs go up
In view of the hike in interchange fee, the RBI has permitted banks to increase charges for cash and non-cash ATM transactions beyond the free monthly permissible limit from the existing Rs 20 per transaction to Rs 21 per transaction (excluding taxes). However, in a major relief for customers, the RBI has directed banks to implement this change from January 1, 2022.
No change in the number of free transactions
Notably, the RBI made it clear that customers will continue to be eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own-bank ATMs. They would also be able to do three free transactions from other bank ATMs in metro centres and five in non-metro centres.
Why has the RBI allowed banks to increase charges?
In a notification last month, the RBI said the charges have been allowed to be increased in view of the increased interchange fee, increasing cost of ATM deployment as well as expenses towards ATM maintenance incurred by banks. The RBI further said that the charges were increased based on the recommendations of a committee which it had set up in June 2019 under the chairmanship of the chief executive of Indian Banks' Association to review the entire gamut of Automated Teller Machine (ATM) charges and fees.
