What changed
RBI mandated that banks must offer free use of their own ATMs and free balance enquiries at other bank ATMs with immediate effect. For cash withdrawals at other bank ATMs, banks cannot increase charges beyond the December 23, 2007 level; those charging over Rs.20 must reduce to Rs.20 by March 31, 2008; and from April 1, 2009, such withdrawals must be free. The Rs.20 charge is all-inclusive, with no additional fees.
What it means for you
Banks lose a revenue stream from ATM interchange fees for balance enquiries and own ATM usage, and face a phased reduction in cash withdrawal fees at other bank ATMs. This increases customer convenience and transparency but pressures banks to recover costs through other channels or higher volumes. Banks must adjust their ATM pricing strategies and ensure compliance by the deadlines.
What you must do
- Immediately implement free own ATM usage and free balance enquiries at other bank ATMs across all branches and systems.
- Review current ATM charges for cash withdrawals at other bank ATMs; cap at Rs.20 per transaction by March 31, 2008, if higher.
- Plan for complete elimination of cash withdrawal charges at other bank ATMs by April 1, 2009, and communicate this to customers.
- Ensure no additional charges are levied under any other head for these transactions; the Rs.20 charge must be all-inclusive.
- Acknowledge receipt of this circular and submit a copy of the branch circular to RBI in due course.
Who it affects
All scheduled commercial banks including Regional Rural Banks (RRBs), Bank customers using ATMs for cash withdrawal and balance enquiry, ATM network operators and inter-bank arrangement partners
Are there any exceptions to the free ATM usage rule?
Yes, cash withdrawals using credit cards and withdrawals at ATMs located abroad are excluded; banks can set their own charges for these.
What is the deadline for reducing charges to Rs.20?
Banks charging more than Rs.20 per transaction for cash withdrawals at other bank ATMs must reduce to a maximum of Rs.20 by March 31, 2008.
Does the Rs.20 charge include any other fees?
Yes, the Rs.20 charge is all-inclusive; no other charges can be levied under any other head, regardless of the withdrawal amount.