The Reserve Bank of India (RBI) on Thursday allowed banks to increase charges for cash and non-cash ATM transactions beyond the free monthly permissible limit from next year. As a result, bank customers will now have to pay Rs 21 per transaction, instead of Rs 20, if they exceed the monthly limit of free transactions.
The new charges will come into effect from January 1, 2022.
However, 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.
Additionally, the central bank has allowed banks to hike interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres. These changes will be effective from August 1, 2021.
The RBI said that the charges have been allowed to increase given the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks/white label ATM operators, as also considering the need to balance expectations of stakeholder entities and customer convenience.
It's important to note here that ATMs are deployed by banks for serving their own customers and also provide services to other banks'' customers as acquirers where they earn interchange income.
According to news agency PTI, the central bank had set up a committee in June 2019 under the chairmanship of the chief executive of the Indian Banks' Association to review the entire gamut of ATM charges and fees with a particular focus on interchange structure for ATM transactions.
The RBI said the suggestions of the panel were 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," it said.
-With inputs from PTI
First Published: IST