What changed
RBI issued a circular on March 12, 2008, requiring all primary urban co-operative banks to make own ATM usage and balance enquiries at other bank ATMs free immediately. For cash withdrawals at other bank ATMs, banks charging more than Rs 20 per transaction must reduce charges to a maximum of Rs 20 by March 31, 2008, and withdrawals will become free from April 1, 2009.
What it means for you
UCBs must absorb the cost of inter-bank ATM transactions for customers, reducing fee income from ATM usage. The circular cites international practices in UK, Germany, and France where customers have free access to all ATMs. Banks need to renegotiate bilateral/multilateral ATM sharing agreements to manage costs.
What you must do
- Update ATM fee schedules to reflect free own-ATM usage and free balance enquiries at other bank ATMs immediately.
- Cap cash withdrawal charges at other bank ATMs to Rs 20 per transaction by March 31, 2008.
- Prepare for zero charges on cash withdrawals at other bank ATMs from April 1, 2009.
- Ensure no additional fees are levied under any other head for these services.
- Acknowledge receipt of the circular to the respective RBI Regional Office.
Who it affects
Primary (Urban) Co-operative Banks, Customers of UCBs, ATM network operators and sharing partners
Are credit card cash withdrawals at ATMs covered by this circular?
No, banks can set their own charges for cash withdrawals using credit cards and for withdrawals at ATMs located abroad.
What is the deadline for reducing ATM charges to Rs 20?
Banks charging more than Rs 20 per transaction must reduce charges to a maximum of Rs 20 by March 31, 2008.
Will customers face any hidden charges for these ATM services?
No, the circular specifies that the services at points 1 and 2 (own ATM use and balance enquiry at other bank ATMs) must be totally free with no other charges under any head.