ATM Cash Withdrawal Charges to Increase from January: Know Charges, How Many Free Withdrawals

ATM Cash Withdrawal Charges to Increase from January: Know Charges, How Many Free Withdrawals

ATM New Rules: All customers across private and public sector banks, who hold debit or credit cards, are due to go through a big change next week. Bank customers have to pay hiked extra charges on ATM withdrawals, irrespective of their banks, once their monthly limit gets exhausted. The Reserve Bank of India, in a notification earlier, had said that customers will have to pay even more charges from January 2022 for ATM transactions once the limit exceeds. This means that the change is set to be implemented late next week. Customers have already got notifications from their banks as the date nears.

Currently, a bank customer pays Rs 20 per transaction at all ATMs to withdraw money once the monthly free limit exceeds. Now the rates are set to be hiked by Rs 1 per extra transaction each month, according to a notification issued by the Reserve bank of India or RBI. Therefore, customers will have to pay Rs 21 per transaction. The central bank had notified about the changes in June this year.

The Reserve Bank of India presently allows all bank customers to do five free ATM transactions at their own banks before these rates are charged. This means that all bank customers with debit cards will be eligible for five free transactions (cash or non cash transactions) at their own banks’ ATMs per month. Additionally, they will be eligible for three free transactions from other banks in metro cities (including  Bengaluru, Mumbai, Chennai, Kolkata, Delhi, and Hyderabad) and five free transactions in non-metro cities.

In its notification, the Reserve Bank of India had said ATM transaction fee had not been hiked since August 2014 and a compensation for that was needed.

“Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling / cap on customer charges is Rs 20 per transaction, as prescribed vide circular DPSS.CO.PD.No.316/02.10.002/2014-2015 dated August 14, 2014,” said the central bank in a notification dated June 10 this year.

“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022,” it added.

The bank said that additional taxes will be charged on this amount. “These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions),” further said the bank.

Before this, the RBI had last increased the transaction limit in August 2021, after a gap of seven years. It 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, the bank noted.

The change is happening years after the RBI built a committee to review the issue. The central bank had in 2019 constituted a committee that met and decided to bring in the changes. Under the chairmanship of the chief executive of the Indian Banks’ Association in June that year, the central bank decided to review the whole gamut f ATM charges and fees with a particular focus on interchange structure for ATM transactions.