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RBI issues notice of fee structure change for India's ATMs

The Indian Banks' Association petitioned for a reduction in the mandated number of free transactions due, it said, to increasing costs to install and operate ATMs.

August 15, 2014

Yesterday the Reserve Bank of India issued a circular to banks announcing changes to ATM fee policy in the nation's six most populous metropolitan areas, where ATMs are most plentiful.

The new rules come in response to a request by the Indian Banks' Association for a reduction in the mandated number of free transactions for both on- and off-us ATM use. The request, they said, was due to the increasing costs related to installation and operation of units, as well as to rising interchange rates.

In a press release announcing that this request had been granted, RBI summarized the revised rules:

[T]he number of mandated free transactions for savings bank account holders at other bank ATMs has been reduced from five to three per month. This will apply for transactions done at ATMs located in six metro centers, namely, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad, which are well-served in terms of payment infrastructure.

... [B]anks have been advised to provide their savings bank account holders with at least five free transactions per month at their own ATMs. Beyond this, banks may decide to levy transaction charges ... which are decided in a transparent manner.

The reserve bank specified that these changes would not apply to customers with basic savings bank deposit accounts, nor to transactions outside the defined metro areas.

RBI also advised issuing banks that they clearly indicate at the ATM location whether it was considered "metro" or "nonmetro," and alert customers to the number of on- and off-us transactions allowed in order to prevent customer confusion and disputes.

Finally, the bank imposed a cap of 20 rupees (33 cents) on all ATM transactions subject to fees.