RBI Increases ATM Withdrawal and Interchange Fees from May 1

DAINIK NATION BUREAU/NEW DELHI

The Reserve Bank of India (RBI) has announced an increase in ATM withdrawal charges, which will take effect from May 1. Customers exceeding the monthly free transaction limit will have to pay an additional Rs 2 per transaction.

Increase in ATM Withdrawal Fees

Currently, banks charge Rs 21 per transaction beyond the free limit. With the new revision, this fee will increase to Rs 23 per transaction. Additionally, the fee for non-financial transactions, such as balance inquiries, will also rise. Previously, checking the account balance at an ATM cost Rs 6; now, it will cost Rs 7.

Interchange Fee Also Increased

RBI has also raised the ATM interchange fee by Rs 2. The interchange fee, which was Rs 17, will now be Rs 19 per transaction. This fee is the amount one bank pays to another for providing ATM services to customers of different banks.

Free ATM Transactions Limit

As per RBI guidelines, customers are entitled to a limited number of free ATM transactions each month. They can avail five free transactions at their own bank’s ATMs. For other bank ATMs, customers in metro cities can perform three free transactions, while those in non-metro areas get five free transactions. Once the free limit is exceeded, additional charges apply as per the new rates.

Why Did RBI Increase ATM Fees?

RBI revised these charges following requests from white-label ATM operators, who cited increasing operational costs. These operators, who provide ATMs independent of any bank, argued that maintaining ATMs has become more expensive due to rising infrastructure and maintenance costs. The revised charges will be applicable nationwide, potentially impacting customers of smaller banks that rely on larger financial institutions for ATM services.

Impact of Digital Payments on ATM Services

The use of ATMs in India has declined due to the surge in digital payments. Online wallets and UPI transactions have significantly reduced the dependence on cash withdrawals. Government data shows that digital transactions in India were valued at Rs 952 lakh crore in FY 2014. By FY 2023, this figure had surged to Rs 3,658 lakh crore, highlighting the shift towards digital banking.

With the new fee structure, customers are encouraged to be mindful of their ATM withdrawals and explore digital alternatives to avoid additional charges.