Bank customers may soon have to pay more for withdrawing cash from ATMs. The Reserve Bank of India (RBI) is reportedly considering increasing the maximum fee that banks can charge for cash transactions beyond the free monthly limit, as well as raising the ATM interchange fee. This move comes after recommendations from the National Payments Corporation of India (NPCI) and an RBI-formed committee.
According to sources, the NPCI, after consulting with industry players, has suggested raising the maximum fee for cash transactions from ₹21 to ₹22 per transaction once customers exceed their free monthly limit. The NPCI has also proposed increasing the ATM interchange fee from ₹17 to ₹19 for cash transactions and from ₹6 to ₹7 for non-cash transactions. The RBI and NPCI have not yet responded to queries about these changes.
Current ATM Transaction Limits and Fees
At present, the RBI allows banks to charge up to ₹21 per ATM cash transaction after customers exceed the free monthly limit. In non-metro areas, customers are allowed five free transactions per month, while in metro cities like Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi, the limit is three free transactions.
Why the Hike?
The proposed fee hike is aimed at addressing the rising costs of operating ATMs, especially in non-metro areas. Industry players and bankers have highlighted that inflation, increased borrowing costs (1.5-2% higher over the last two years), and higher expenses related to transportation, cash replenishment, and compliance have made it more expensive to maintain ATMs.
An RBI-formed committee, chaired by the CEO of the Indian Banks’ Association (IBA) and including officials from State Bank of India (SBI) and HDFC Bank, assessed the costs for both private and public sector banks. In September last year, the committee recommended that while NPCI’s proposed fee hike could be applied to metro areas, the focus should be on addressing the challenges in rural and semi-urban areas.
Interchange Fee Changes
The interchange fee is the amount one bank pays another when its customer uses the other bank’s ATM. The NPCI has recommended increasing this fee to ₹19 for cash transactions and ₹7 for non-cash transactions. However, banks and white-label ATM operators have suggested a higher fee of ₹21 for cash transactions and ₹7 for non-cash transactions in non-metro areas.
What’s Next?
The RBI is currently reviewing the recommendations from both the NPCI and the ATM interchange committee. While no final decision has been announced, the proposed changes could significantly impact customers, especially those in rural and semi-urban areas who rely heavily on ATMs for cash withdrawals.
If implemented, these fee hikes could lead to higher costs for customers who frequently use ATMs beyond their free monthly limits. The move has sparked concerns among consumers, who are already grappling with rising living costs. Meanwhile, banks argue that the fee adjustments are necessary to cover the increasing operational expenses of maintaining ATMs.
As the RBI evaluates the recommendations, customers are advised to keep an eye on updates and plan their cash withdrawals accordingly to avoid additional charges.
ATM Withdrawals to Get Costlier as RBI Considers Fee Hike
Bank customers may soon have to pay more for withdrawing cash from ATMs. The Reserve Bank of India (RBI) is reportedly considering increasing the maximum fee that banks can charge for cash transactions beyond the free monthly limit, as well as raising the ATM interchange fee. This move comes after recommendations from the National Payments Corporation of India (NPCI) and an RBI-formed committee.
According to sources, the NPCI, after consulting with industry players, has suggested raising the maximum fee for cash transactions from ₹21 to ₹22 per transaction once customers exceed their free monthly limit. The NPCI has also proposed increasing the ATM interchange fee from ₹17 to ₹19 for cash transactions and from ₹6 to ₹7 for non-cash transactions. The RBI and NPCI have not yet responded to queries about these changes.
Current ATM Transaction Limits and Fees
At present, the RBI allows banks to charge up to ₹21 per ATM cash transaction after customers exceed the free monthly limit. In non-metro areas, customers are allowed five free transactions per month, while in metro cities like Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi, the limit is three free transactions.
Why the Hike?
The proposed fee hike is aimed at addressing the rising costs of operating ATMs, especially in non-metro areas. Industry players and bankers have highlighted that inflation, increased borrowing costs (1.5-2% higher over the last two years), and higher expenses related to transportation, cash replenishment, and compliance have made it more expensive to maintain ATMs.
An RBI-formed committee, chaired by the CEO of the Indian Banks’ Association (IBA) and including officials from State Bank of India (SBI) and HDFC Bank, assessed the costs for both private and public sector banks. In September last year, the committee recommended that while NPCI’s proposed fee hike could be applied to metro areas, the focus should be on addressing the challenges in rural and semi-urban areas.
Interchange Fee Changes
The interchange fee is the amount one bank pays another when its customer uses the other bank’s ATM. The NPCI has recommended increasing this fee to ₹19 for cash transactions and ₹7 for non-cash transactions. However, banks and white-label ATM operators have suggested a higher fee of ₹21 for cash transactions and ₹7 for non-cash transactions in non-metro areas.
What’s Next?
The RBI is currently reviewing the recommendations from both the NPCI and the ATM interchange committee. While no final decision has been announced, the proposed changes could significantly impact customers, especially those in rural and semi-urban areas who rely heavily on ATMs for cash withdrawals.
If implemented, these fee hikes could lead to higher costs for customers who frequently use ATMs beyond their free monthly limits. The move has sparked concerns among consumers, who are already grappling with rising living costs. Meanwhile, banks argue that the fee adjustments are necessary to cover the increasing operational expenses of maintaining ATMs.
As the RBI evaluates the recommendations, customers are advised to keep an eye on updates and plan their cash withdrawals accordingly to avoid additional charges.
