Banks to charge Rs. 21 for Cash Withdrawal from ATM beyond Free Limit: RBI [Read Circular]

Banks - Cash Withdrawal from ATM - RBI - Taxscan

The Reserve Bank of India (RBI) has allowed the banks to hike the fee charged on cash withdrawal beyond the permitted free Automated Teller Machine (ATM) transaction limit from Rs 20 to Rs 21 per transaction, with effect from January 1, 2022.

The Regulatory Bank had constituted a Committee in June 2019 under the Chairmanship of the Chief Executive, Indian Banks’ Association to review the entire gamut of ATM charges and fees with particular focus on interchange structure for ATM transactions.

The recommendations of the Committee have been comprehensively examined. It is also 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.

“Accordingly, given the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks / white label ATM operators, as also considering the need to balance expectations of stakeholder entities and customer convenience,” the RBI notified.

The Apex Bank has decided to allow an increase in interchange fee per transaction from Rs.15 to Rs17 for financial transactions and from Rs.5 to Rs.6 for non-financial transactions in all centres. This shall be effective from August 1, 2021.

“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 ₹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 ₹21 per transaction. This increase shall be effective from January 1, 2022,” the circular reads.

Moreover, the RBI has clarified that applicable taxes, if any, shall be additionally payable. These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions).

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