Frequent money withdrawals from ATMs will be costlier from November

Frequent withdrawal of money from ATMs will become expensive from November, with the RBI imposing a limit of 3 transactions per month from ATMs of other banks and 5 from the same bank in six metropolitan cities.

A customer will be required to pay a fee of up to Rs 20 for using Automated Teller Machines (ATMs) beyond the permitted numbers of transactions in Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.

The new guidelines, which were issued in pursuance of a representation made to the central bank by Indian Banks' Association, will come into effect from November 1, 2014.

"The number of mandatory free ATM transactions for savings bank account customers at other banks’ ATMs is reduced from the present 5 to 3 transactions per month (inclusive of both financial and non-financial transactions) for transactions done at the ATMs located in 6 metro centres," RBI said in a notification.

With regard to own bank ATMs, RBI said that banks will have to permit at least 5 free transactions per month (both financial and non-financial).

Banks have been allowed to charge a maximum fee of Rs 20 per transaction beyond the stipulated ceilings.

The Reserve Bank of India (RBI) also made it clear that the said reduction will not apply to small/no frills/basic savings bank deposit account holders.
Also, it will not be applicable for account holders other than the six metro cities.
India has a total of 1.6 lakh ATMs across the country as of March 2014.

The Reserve Bank said the cap on the number of free ATM transactions have been imposed in view of the growing cost of ATM deployment and maintenance incurred by banks and also in view of rising interchange outgo due to free usages.

The central bank has asked lenders to ensure fair and transparent information to customers regarding the new charges with regard to ATM withdrawals beyond the stipulated cap.

It has also asked banks to put in place proper mechanism to track such transactions and that no customer inconvenience or complaints arise on account of this.

Further, RBI said that banks should clearly indicate the location of an ATM as metro or non-metro to enable customers identify status of the ATM in relation to availability of number of free transactions.

"Banks are advised to put in place suitable mechanism for cautioning/advising/alerting the customers about the number of free transactions already utilised during the month by the customer and the possibility that charges may be levied as per the banks’ policy on charges," the RBI said.