RBI plays Santa Claus: proposes to rationalise ATM charges

PFW Bureau / Dec 25

On  the eve of Christmas, Reserve Bank of India (RBI) has placed a proposal before Indian banking industry to establish a fair and transparent framework for the service charges for Automated Teller Machines (ATM) to encourage greater financial inclusion and promote enhanced access to ATMs.

In a draft proposal, `ATMs of Banks: Fair pricing and enhanced access’, RBI proposed to the banking industry to make the use of own ATMs free for all purposes. 

The apex banks said that presently there are 31,000 ATMs in the country. And, a bank customer should not be charged for using ATM of other banks for balance enquiries. “For use of other bank ATMs for cash withdrawal, banks which are charging more than Rs 20 per transaction shall reduce the charge to Rs 20 per transaction by March 31, 2008”, the apex bank said.

RBI said that the free services, wherever applicable, may be effective from April 1, 2009.

Charges levied by banks

Information collected from all public sector banks and a cross section of other banks indicates that they do not charge their customers that use their own ATMs for cash withdrawals and balance enquiry. It is reported that one bank is extending cash withdrawal and balance enquiry services free of charge to all customers, except the 'No Frills' account holders. The charges range from 'Nil' to Rs.57/- per transaction when their customers use the ATMs of other banks for cash withdrawals and balance enquiry. The charges depend on the network relationship between the bank owning the ATM and the customer’s own bank.

Under bilateral arrangement
In case the customers use ATMs of the banks with which their bank has "bilateral arrangement" (customers of one bank can use the ATMs of the other bank with which the customers bank has a ATM sharing arrangement), the charges levied by the banks on their customers vary from 'Nil' to Rs.50 per transaction for cash withdrawal and 'Nil' to Rs.20 for each balance enquiry.

Under shared ATM network (other than NFS)
The charges levied by banks which are members of shared ATM network (inter-connected ATMs of a group of banks) and provide access to other ATM networks (other than NFS), vary from 'Nil' to Rs.55 per transaction for cash withdrawal and the charges levied for each balance enquiry vary from 'Nil' to Rs.20.

Under shared ATM network - NFS
In respect of ATM networks of banks which are "connected to NFS", the charges levied by the
banks vary from 'Nil' to Rs.55 per transaction for cash withdrawal and 'Nil' to Rs.20 for each
balance enquiry.

Under VISA / MasterCard network
In respect of ATMs which are 'directly connected' to VISA / MasterCard network, the charges
levied vary from 'Nil' to Rs.57 per transaction for cash withdrawal and 'Nil' to Rs.20 for each
balance enquiry.

RBI has invited feedback from all interested stakeholders on the draft approach paper. The feedback may be sent to the Chief General Manager, Department of Payment and Settlement Systems, Reserve Bank of India, 14th Floor, Shahid Bhagat Singh Road, Mumbai – 400 001 on or before January 31, 2008. The feedback may also be sent by fax (022-2265 9566) or emailed.