Banks in India are “cornering” customer surplus by charging high fees on inter-bank ATM transactions in the name of recovering technology costs, said Reserve Bank of India (RBI) on Wednesday.

Addressing a banking technology conference, organised by Indian Banks Association (IBA) here, RBI Executive Director R B Burman also pointed out that banks forming various ATM platforms is a tendency towards cartelisation.   And the analysis of expenses incurred for serving customer at the counter and ATMs shows that costs are much less at ATMs, said he.

Customers unaware

Customers get these services free over the counter, according to Mr Burman, and as such charging for transactions at ATMs amounts to cornering of consumer surplus in the name of cost on technology while it should be lower cost due to efficiency gains. ATMs are being increasingly used as substitute for cash delivery at counter, money transfer and balance inquiry process. The customers place deposits at lower rate with banks and they expect to get certain services free. The charges levied on the customers vary from bank to bank and they  also vary according to the ATM network that is used for transaction.

As a consequence a customer is not aware before hand, how much one pays for a particular ATM transaction, especially when using ATM from other banks, Mr Burman said.