ATM transactions to cost more beyond the permissible limit
ATMs also know as an automated teller machine, is a specialized computer that makes it convenient to manage an account holder funds. These are deployed by banks serving their own as well other banks’ customers.
The Reserve Bank of India(RBI) permitted the banks to raise the charge amount for cash as well as non-cash ATM transactions beyond the allowed free limit.
Bank customers now have to pay Rs 21 per transaction, instead of Rs 20, after Jan 1, 2022, after exceeding the limit of free transactions.
“To compensate the banks for higher interchange fees and also given the general escalation and increase in the cost, the banks are allowed to charge the person more. This rule will be effective from next year.” RBI said in a circular.
The customers will still be eligible for five free transactions every month as before. They can also do three free ATM transactions from other banks ATM in metro centres and five in non-metro centres.
Apart from all this, from August 1, 2021, banks can also increase the interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and Rs 5 to Rs 6 for no financial ones.
According to the RBI, the change is made due to the increased cost of ATM deployment and expenses in maintaining ATMs.
The central bank had previously set up a committee in 2019 under the chairmanship of the executive of the Indian Banks Association to review the entire spectrum of the ATM charges and fees along with the main focus on interchange structure for ATM transactions.
Comprehensively examining the suggestion of the panel, RBI said, “It is observed that the last change in interchange fee structure for ATM transaction was in August 2012. So, a sustainable and a long time has passed since the changes were made. ”
With the first ATM setup in 1987 by HSBC in Mumbai, now there are almost 1,15,605 ATMs and 97,970 off-site ones. In 1997, IBA set up Swadhan, which was the first network of shared ATMs allowing interoperable transactions.