Barely five months after the service charge on using automated teller machines (ATMs) of other banks was scrapped, it will be re-introduced if someone uses this facility more than five times a month, a high-ranking banking sector official said here on Friday. The Indian Banks Association (IBA), the representative organisation of private and public sector banks in India, has proposed that instead of allowing an unlimited number of free transactions at another bank’s ATM, there should be a limit of up to five free transactions a month.

“Beyond five transactions, we propose to levy a transaction fee of Rs.20 per transaction for using another bank’s ATM,” said IBA deputy chief executive K Unnikrishnan.

The Reserve Bank of India (RBI) has accepted the IBA proposal, but it will be implemented only by October, Unnikrishnan said on Friday.

A RBI spokesperson confirmed the development.

“It will be optional on the part of the banks to levy this charge on customers. We have not made it mandatory but left it to their (banks’) discretion,” Unnikrishnan said.

He explained that since the RBI’s permission has been taken, it would not be improper on the part of banks to levy the charges if they wanted.

There are a little over 40,000 ATMs in India, of which nearly 30,000 are in urban centres and metros. The remaining 10,000 are in semi-urban centres with only a sprinkling in rural areas.

There are around 80 public sector, private, cooperative and foreign participating banks in the ATM network in the country.

After the ATM transactions fees on using other banks’ ATMs was scrapped in April, the IBA studied the entire gamut of ATM transactions.

“We found that a majority of the ATM transactions were in the range of average withdrawals of Rs.3,500-4,000, and 90 percent of all transactions were below Rs.10,000. Hence, the intended purpose to serve the common man was achieved,” Unnikrishnan said.

However, there was a small minority of users who withdrew very large sums on account of high card limits given by some banks to privileged customers.

At the other extreme, there were some customers who withdrew miniscule amounts, or made other kinds of inquiries. This created several logistics problems causing avoidable expenditure for banks at the cost of the common user, he said.

Taking into account these and related aspects, the IBA submitted a proposal to RBI last month.

“We shall give sufficient notice to the customers before implementing it, and individual banks can also inform their customers about the proposal and whether or not they would charge their customers. It will give time to effect suitable modifications in the ATM programmes to implement it,” Unnikrishnan said.

See Earlier Post containing RBI circular exempting charge/Fees on withdrwal from other banks ATM:-

No charge on cash withdrawal from ATM machine of other bank w.e.f. 01.04.2009

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  1. A. Ranganathan says:

    I have a few comments on ATM cards, based on my thirty years working experience with Banks in India abroad.

    ATM cards are not always issued at a Customer’s request. There is a Bank near my residence which has taken on the onerous duty of disbursing salaries of Corporation workers, a majority of whom are less than literate. This Bank has thrust upon such workers ATM cards for the purpose of withdrawing their salaries and for reducing the pressure on their tellers on salary days. I don’t think they collect a charge
    There are other Banks who do levy a charge e.g., IDBI Bank a whopping Rs.110/- per year whether the card is used or not! I possess ATM cards of both SBI and IDBI which have been thrust upon me without my asking for it.
    The Cards confer more benefits to the Bank than to the Card holders. Use of Cards help the Bank to ease the pressure on their tellers, reduce pressure on space inside the Bank branch, reduces volume of cash handled by tellers handling, reduces pressure on their computer systems etc..
    Even replenishing of stock in the ATMs are entrusted to outside agencies, of course at considerable cost.

    Restricting number of withdrawals at home Branch/non home branch or at other Banks will severely affect the Card holders who have by now got used to carry less cash on their person and to lesser risk of loss. Especially so when one travels abroad/within India. ATMs are a boon in finding a cash source without mush hassle. And restricting withdrawal on other Bank’s machines will severely hamper such travellers.

    What has been given should not be taken away. Instead of putting restictions on number of withdrawals and imposing a steep charge, The RBI and the Banks should work out an alternate solution to this perceived problem

    A. Ranganathan

  2. shadab says:

    do u no my dear friends ,,the salary for bank po and all is 25000 /- per month ,
    just by sitting at one place and taking 25000 is very good for them..
    do u no that from where does the salary come for bank officials

    ans : the salary comes from us ..i.e the money we are depositing in bank .is been used as to give the loans and thus the bank earns and pay a huge bulky amount to the officials…just think its rite or not?

  3. prabhakar says:

    i have a savings account in axis bank. on 24th of last month i  withdrawn 1000rs  from indian account has debited 1552rs. can i get the debited 552rs back?  

  4. Naveen Rawat says:

    HDFC Bank has deducted the amount 4 times(Oct, 10 & Nov, 10)from my Account without informing me. When i asked them they becoz of money withdrawl from non-HDFC bank ATM & when i asked them that they never informed me about the charges & fees from non-bank transaction rule, they said its not their accountability.

  5. Arvind Kakde says:

    State Bank of India is the only bank in India that charges an annual fee of Rs. 50 if a customer has opted for a ATM Debit Card whether the customer uses the ATM or not.

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