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RBI allows banks to raise ATM transaction charges: How it affects customers

The Reserve Bank of India (RBI) has allowed banks to raise ATM transaction charges, based on recommendations of a committee. The central bank has allowed banks to increase interchange transaction fees and charges on non-financial transactions. Here is all you need to know.

UPDATED: June 11, 2021 17:52 IST

The Reserve Bank of India (RBI) has allowed banks to hike automated teller machine (ATM) transaction charges on the recommendations of a committee.

The central bank released a circular on Thursday, allowing banks to hike interchange fees per transaction through ATMs and non-financial transactions as well. Banks will be able to raise ATM transaction charges from August 1, 2021.

The RBI noted 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.

HIGHER CHARGES ON ATM TRANSACTIONS

Agreeing that a substantial time has passed since ATM transaction fees were last changed, RBI has given banks the green signal to allow an increase in interchange fee per transaction from Rs 15 to Rs 17 for financial transactions.

It may be noted that an interchange fee is an amount that a card-issuing bank pays to ATM operators in case its customer use an ATM that does not belong to it.

The central bank has also allowed an increase in non-financial transactions from Rs 5 to Rs 6 in all centres.

While customers are still eligible for five free transactions — inclusive of financial and non-financial transactions — every month from their own bank ATMs, they will be required to pay more for transactions conducted beyond the limit.

Meanwhile, customers have also been allowed three free transactions from ATMs of other banks in metro cities and five transactions in non-metro cities.

“Beyond the free transactions, the ceiling/cap on customer charges is 20 per transaction,” RBI said. This means customers can be charged up to Rs 20 for transactions at the arms of other banks beyond the free limit.

However, to compensate banks for higher interchange fee, banks have been allowed to increase the customer charges to Rs 21 per transaction, said RBI. This increase will be effective from January 1, 2022.

In addition to the aforementioned increase in rates, taxes — if any — shall be additionally payable by the customer.

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