What are the Revised ATM Cash Withdrawal charges and List of all the charges revised by RBI

Alan Joseph Alan Joseph
Jun 11, 2021 5 min read
What are the Revised ATM Cash Withdrawal charges and List of all the charges revised by RBI

The Reserve Bank of India has announced a considerable number of changes in regards to the financial and non-financial transactions related to the ATMs in the country. The Central Bank has provided the permission for the banks to increases the charges from their customers. Let’s look at the latest Financial service Fees and charges revised by RBI.

RBI Revised Financial Charges – Latest News
Interchange Fee charged by the Banks revised by RBI
Interchange Fees for Customers revised by RBI
Reason for the increase in the charges by RBI
The Committee that revised the ATM charges
List of Financial Charges revised by the RBI
FAQ

RBI Revised Financial Charges – Latest News

A banking charge will be applicable from 1 January 2022 where the bank customers will have to pay an amount of INR 21 if they exceed the monthly limits of the withdrawal from the ATM. The ATM charges which were in existence were around INR 20 per customer if they exceed the monthly limits of the free transactions provided by the bank.

On 10 June 2021, the Reserve Bank of India has provided the permission for the banks to increase the charges regarding cash and non-cash Automated Teller Machine for exceeding the number of free financial transactions available on a monthly basis from next year i.e., 2022.

Interchange Fee charged by the Banks Revised by RBI

The circular contained the information regarding the interchange fee charged by the Banks for the ATM transactions. The interchange fee for the ATM transactions is increased from INR 15 to INR 17 for each financial transaction and the interchange fee for the non-financial transactions is increased from INR 5 to INR 6, which will be effective August 1, 2021.

An interchange fee is paid by the banks to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank.


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Interchange Fees for Customers revised by RBI

The Interchange fee has been revised by the RBI from INR 20 to INR 21 if the customers exceed the monthly limits of the withdrawal from the ATM.

RBI added that the customers will continue to enjoy the benefits of free 5 transactions every month which will be inclusive of financial and non financial transactions. The free transactions will be available every month through the ATMs of the banks with which they have an account.

The customers will also be eligible to do transactions in the ATMs of other banks with a limit of 3 free transactions in the metro cities and in the non-metro cities the customers will be eligible for 5 free transactions from the ATMs of another bank.

RBI conveyed in a statement that in order to compensate the banks for the higher fee charges for interchange and due to the general increase in the costs, the Reserve Bank of India has allowed the Banks to increase the charges on ATM transactions to INR 21.

Number of ATM's in India
Number of ATM's in India

Reason for the increase in the charges by RBI

The Reserve Bank of India has conveyed that the reasons for letting banks increase the fee and charges for the transactions were mainly due to the increase in the cost towards the maintenance of the ATMs and also the increase in the cost for the deployment of the ATMs.

The maintenance cost incurred by the banks and the white label ATM providers is considered to have the necessity to balance the expectations of the stakeholders of the financial institutions as well as providing a convenience to the customers.


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The Committee that revised the ATM charges

The committee which decided on the ATM charges was established by the Reserve Bank of India back in the year 2019 in the month of June. The committee was set up under the chairmanship of VG Kannan who was the chairman of the Indian Banks’ association. The main aim for the setting up of the committee was to review the entire range of the ATM charges.

The recommendations of the committee were announced to the public by the Reserve Bank of India in the year 202o in the month of July and the recommendation was to use the population as a metric in order to measure the calculations for the ATM charges.

The Reserve Bank of India had also conveyed that the recommendations from the panel were examined in detail.

List of Financial Charges revised by the RBI

From January 1 2022, Customers will be charged INR 21 per ATM transaction after exhausting limit of free transactions which a customer is eligible to conduct from other banks' ATMs. The interchange fee is hiked from the existing INR 20 to INR 21 per transaction.

The interchange fee for the ATM transactions for the Banks is increased from INR 15 to INR 17 for each financial transaction and for the non-financial transactions is increased from INR 5 to INR 6, which will be effective August 1, 2021.

Conclusion

The last change in the interchange fee in regards to the transactions of the ATMs was in the year 2012 and the charges that were paid by the customers were revised in the year August 2014. There has been a lot of time since there was a change in the charges on the customers regarding the use of ATMs and the transaction fees.

FAQ

Why has RBI revised Cash withdrawal charges?

The Reserve Bank of India has conveyed that the reasons for letting banks increase the fee and charges for the transactions were mainly due to the increase in the cost towards the maintenance of the ATMs and also the increase in the cost for the deployment of the ATMs.

What are the revised charges by RBI?

Customers will be charged INR 21 per ATM transaction after exhausting limit of free transactions and The interchange fee for the ATM transactions for the Banks is increased from INR 15 to INR 17 for each financial transaction and for the non-financial transactions is increased from INR 5 to INR 6.

What is interchange fee ATM?

An interchange fee is paid by the banks to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank.

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