ATM Withdrawal Alert: Bank customers with a credit or debit card from next month will be eligible to pay extra charges for withdrawal of cash at ATMs across the country after their limit to withdraw money from their own banks’ ATMs gets exhausted. The Reserve Bank of India, in a notification earlier, had said that customers will have to pay even more charges from January 2022 for ATM transactions once the limit exceeds. Banks are already notifying this change to remind customers of it. ATM transactions are set to get costlier because the RBI had allowed banks to increase charges on cash and non-cash automated teller machines (ATMs) beyond free monthly limits.
Once the change is implemented, customers will have to pay Rs 21 per transaction at their own banks’ ATMs to withdraw money once the limit exceeds. Currently, a bank customer pays Rs 20 per transaction if the same situation arises. The Reserve Bank of India allows all bank customers to do five free ATM transactions at their own banks before these rates are charged. The new rule will come into effect from January 1, 2022, as per the central bank. However, all bank customers with debit cards will be eligible for five free transactions (cash or non cash transactions) at their own banks’ ATMs per month. Additionally, they will be eligible for three free transactions from other banks in metro cities and five free transactions in non-metro cities. The RBI had notified about the changes in June this year.
What Exactly did the RBI Say About ATM Transactions?
“Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling / cap on customer charges is Rs 20 per transaction, as prescribed vide circular DPSS.CO.PD.No.316/02.10.002/2014-2015 dated August 14, 2014. 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 Rs 21 per transaction. This increase shall be effective from January 1, 2022," said the Reserve Bank of India in a notification dated June 10, 2021.
“These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions)," further said the central bank, adding that additional taxes will be payable on this amount.
Banks Notify Customers About New Rule
A few banks, including HDFC Bank and Axis Bank have updated their website with the new notification.
“With effect from 1st January 2022, ATM transaction charge rate beyond free limit of Rs. 20 + taxes would be revised to Rs. 21 + taxes, wherever applicable," says the HDFC Bank website.
“For transactions at HDFC Bank ATMs, only Cash withdrawal transactions will be considered for charging. Non-Financial Transactions (Balance Enquiry, Mini Statement & PIN Change) will be free. For transactions at Non HDFC Bank ATMs, transactions considered for charging will include both Financial (Cash Withdrawal) and Non-Financial Transactions (Balance Enquiry, Mini Statement & PIN Change)," it adds.
According to the Axis Bank website, “Effective 1st January 2022, financial transaction fee above the free limit in Axis Bank or other bank ATMs will be INR 21 + GST.”
Before this, the RBI had last increased the transaction limit in August 2021, after a gap of seven years. It observed that 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. A substantial time has thus elapsed since these fees were last changed, the bank noted.