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RBI Changed the rules regarding ATM cash withdrawals

Starting 1 January 2022, bank customers will have to pay more for their ATM transactions once the free monthly limit gets exhausted. The Reserve Bank of India (RBI) had announced that the cash withdrawal charges on ATMs will be hiked from 1 January 2022.
Lenders like ICICI Bank, HDFC Bank and Axis Bank have updated their website regarding the increased charges for cash and non-cash ATM transactions beyond the free monthly permissible limit for the users.
Bank customers will have to pay more than what they were paying earlier for cash withdrawal from ATMs.
The hiked charges will be applicable once the free monthly limit gets exhausted. Customers have been receiving notifications of hiked charges from their respective banks. “With effect from 1st January 2022, ATM transaction charge rate beyond free limit of Rs. 20 + taxes would be revised to Rs. 21 + taxes, wherever applicable.
RBI said these charges have been allowed to increase due to the increasing cost of ATM deployment and expenses towards the maintenance of ATM incurred by banks or white label ATM operators. PTI reported that as of March 31, 2021, there are 115,605 onsite ATMs and 97,970 off-site ATMs in the country and around 900 million debit cards issued by different banks were outstanding on March-end.

Overview :

The changes were announced on the basis of the suggestions of a committee set up by RBI in June 2019, under the chairmanship of the chief executive of the Indian Banks’ Association to review the entire gamut of ATM charges and fees with a particular focus on interchange structure for ATM transactions, news agency PTI reported.
The recommendations of the panel were comprehensively examined. It is also observed that the last change in interchange fee structure for ATM transactions was in August 2012, while the charges payable by customers were last revised in August 2014.
A substantial time has thus elapsed since these fees were last changed,” the central bank said in its circular.

What the changes are :

1. Exceeding monthly limit of free transactions:

Customers will have to pay ₹21 per transaction, instead of ₹20 if they exceed their monthly limit of free transactions.
This increase will be effective from January 1, 2022.
“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to ₹21 per transaction. This increase shall be effective from January 1, 2022,” RBI said in its circular.

2. New free ATM transaction limit:

Customers will continue to remain eligible for five free transactions, including financial and non-financial, per month from their own bank ATMs.
They will also be eligible for
- three free transactions from the ATMs of other banks in metro centres and
- five transactions in non-metro centres.

3. Increase in interchange fee:

From August 1 this year, banks are allowed to increase the interchange fee per transaction from
- ₹15 to ₹17 for financial transactions and
- from ₹5 to ₹6 for non-financial transactions in all centres.
RBI said these charges have been allowed to increase due to the increasing cost of ATM deployment and expenses towards the maintenance of ATM incurred by banks or white label ATM operators.
PTI reported that as of March 31, 2021, there are 115,605 onsite ATMs and 97,970 off-site ATMs in the country and around 900 million debit cards issued by different banks were outstanding on March-end.

Banks have already notified the hike
According to the HDFC Bank website, the ATM transaction charge rate beyond the free limit of Rs. 20 + taxes will be changed to Rs. 21 + taxes as of January 1, 2022. Only cash withdrawal transactions will be evaluated for charge at HDFC Bank ATMs.

About RBI:

The Reserve Bank of India(RBI) is India’s central bank and regulatory body and is responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system.
It also manages the country’s main payment systems and works to promote its economic development.
Established : 1 April 1935
Governor: Shaktikanta Das
Deputy governors (4): Rabi Sankar, M. Rajeshwar Rao, Dr. M. D. Patra, M. K. Jain