RBI Allows Banks To Raise Charges For ATM Withdrawals

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The Reserve Bank of India (RBI) on Thursday allowed banks to raise charges on using ATM machines to Rs 21 per transaction. The new charges will be effective from January 1, 2022.

However, customers will have to pay Rs 21 per transaction, instead of Rs 20, if they exceed the monthly limit of free transactions. They will also continue to be eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They would also be able to do three free transactions from other bank ATMs in metro centres and five in non-metro centres.

Moreover, from August 1, 2021, banks are allowed to increase interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres.

According to the RBI, the revised charges will compensate banks for higher interchange fee – which a merchant bank pays to the card-issuing bank each time a customer swipes their credit or debit card.

“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 ₹21 per transaction. This increase shall be effective from January 1, 2022,” the RBI said in a notification.

The new changes were cleared on the basis of the recommendations of a committee that was formed in June 2019 to study the ATM charges and interchange fees.

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.

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