Bank / Credit Union

RBI committee seeks increase in ATM charges

photo provided by iStock

June 25, 2020

The Reserve Bank of India committee is recommending capping ATM cash withdrawals to ₹5,000 ($66) and levy charges for any larger amounts according to a Business Insider report.

Currently, customers can withdraw ₹10,000 ($130 US) in a single transaction and ₹20,000 ($26) in a day from a State Bank of India ATM. For other banks, the single transaction and daily withdrawal limit is different from card to card. For ICICI Bank, the daily withdrawal limit could range from ₹50,000 ($661) to ₹1.5 lakh ($1,895).

The committee was appointed by the RBI in June 2019 to review the ATM interchange fee structure. It justifies its recommendations on the fact that the cost of operating ATMs has increased whereas interchange fees haven't been reviewed since 2012 and the cap on ATM usage charges has not budged since 2008.

Even though the committee has submitted its recommendations, there is no update on whether RBI has accepted them. According to the report, the charge for financial transactions, over and above free transactions, should be increased by 16% from ₹15 ($0.20) to ₹17 ($0.23). The committee has also recommended that non-financial transaction charges, like balance inquiry or PIN change, should also be increased.

"While the recommended changes as above in interchange do not cover the complete cost per transaction, it is felt that given the asymmetry in acquiring and issuing transaction volumes, a via media needs to be arrived at between issuing banks and acquiring banks," the committee said in the report.

Members of the committee include representatives from National Payments Corp of India, State Bank of India, HDFC Bank, Confederation of ATM Industry and Tata Communications Payment Solutions Ltd.