New RBI Rules

 

ATM Cash Withdrawal Charge, Debit Card, Credit Card Fee to Increase Soon

 

The Reserve Bank of India (RBI) on June 10 allowed banks to hike ATM Interchange fee on the recommendations of a committee. Here's how it affects customers

 

The Reserve Bank of India (RBI) on Thursday announced changes in the Automated Teller Machine (ATM) rules with regard to cash withdrawal. These changes include an increase in charges for transactions beyond the free monthly permissible limit, a new free ATM transaction limit and an increase in the interchange fee per transaction.Almost all of these changes will come into effect from August 1 this year, and a few others from January 1, 2022.

From 1stAugust 2021, Rs 17 would be charged as interchange fee per financial transaction and Rs 6 for per non-financial transactions. From January 1, 2022 , bank customers will be charged Rs 21 per ATM transaction instead of Rs 20 after exhausting the limit of free transactions. Customers are eligible for 5 free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs.

For customers using other bank ATMs for cash withdrawal are allowed three free ATMtransactions in metro cities and five in non-metro centers.

The regulator has hiked the charges of ATM transactions after almost seven years. “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. " RBI said in a notification.

“These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions),” RBI said.

 

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 is imperative to note that the ATMs are deployed by banks for serving their own customers and also provide service to other banks’ customers as acquires where they earn interchange income. Moreover, the RBI said that in addition to the aforementioned increase in rates, taxes - if any - shall be additionally payable by the customer.