Recent Circular: RBI permits banks to lift ATM transaction charges

The Reserve Bank of India (RBI) has allowed banks to raise ATM transaction charges, supported by the recommendations of a committee. The Central bank has allowed banks to extend interchange transaction fees and charges on non-financial transactions. Here is all we need to know.

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 discharged a circular on Thursday, permitting banks to hike interchange fees per transaction through ATMs and non-financial transactions also. Banks are ready to raise ATM transaction charges from August 1, 2021.

The run noted that the last modification in the interchange fee structure for ATM transactions was in August 2012, whereas the costs collected by customers were last revised in August 2014.

HIGH-RISE IN ATM TRANSACTIONS

Agreeing that a considerable time has passed since ATM transaction fees were last modified, the run has given banks the green signal to permit a rise in interchange fees per transaction from Rs 15 to Rs 17 for money transactions.

It may be noted that an interchange fee is a quantity that a card-issuing bank pays to ATM operators just in case its client uses an ATM that does not belong to that. The Central bank has additionally allowed a rise in non-financial transactions from Rs 5 to Rs 6 in all centres.

While customers are still eligible for 5 free transactions — comprehensive of monetary and non-financial transactions — every month from their own bank ATMs, they will be needed to pay additional for transactions conducted on the far side of the limit.

Meanwhile, customers have additionally been allowed 3 free transactions from ATMs of different banks in metro cities and 5 transactions in non-metro cities.

“Beyond the free transactions, the ceiling/cap on customer charges is 20 per transaction,” RBI said. This implies customers may be charged up to Rs 20 for transactions at the arms of different banks on the far side of the free limit. However, to compensate banks for higher interchange fees, banks are allowed to extend the customer charges to Rs 21 per transaction, said RBI. This increase is effective from Gregorian calendar month one, 2022. In addition to the same increase in rates, taxes -if any shall be to boot collectible by the customer.

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