The Telegraph
Friday , August 15 , 2014
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Fetters on free use of ATMs

Mumbai, Aug. 14: The RBI sprang a nasty surprise on the eve of Independence Day when it gave banks the freedom to charge their account holders beyond five ATM transactions per month, while bringing down the number of free transactions at non-home branch ATMs to three from five.

Non-home branch ATM refers to automated teller machines (ATMs) of banks in which the customer does not have a bank account.

Till now, only non-home bank customers were charged for using an ATM beyond five transactions. Banks were free to charge up to Rs 20 on every transaction beyond the free five.

While retaining the cap on the levy, the Reserve Bank of India (RBI) said the charge would now be same for both financial and non-financial transactions that include balance enquiry, change of pin number and mini statement. Earlier, banks could charge a different, often lower rate, for non-financial withdrawals.

After November 1, if a customer does more than three transactions (both financial and others) from the ATM of another bank, up to Rs 20 can be deducted from his savings account per transaction.

The reduction will, however, not be applicable to customers having basic or small savings bank accounts as well as for ATMs located outside Mumbai, New Delhi, Chennai, Calcutta, Bangalore and Hyderabad.

Home branch limit

On charges for use of own-bank ATMs, the RBI said, “banks are advised that at least five free transactions (financial and non financial) per month should be permitted to the savings bank account customers for use of own bank ATMs at all locations. Beyond this, banks may put in place appropriate board-approved policy to charge customers for use of own bank ATMs.’’

The RBI has left it to the banks’ discretion to charge its customer beyond five transactions at the home-branch ATM. Banking circles feel private sector banks could take the lead in doing this.

Banks, in association with the National Payments Corporation of India, had earlier sent a proposal with these demands to the RBI. Banks came under pressure to beef up security at ATMs after the attack on a woman in Bangalore last year. Lenders complain that the increased security has translated into increased cost, and therefore, they should be allowed to charge more.