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RBI caps free usage of cross-bank ATMs to 3 a month

Reserve Bank of India has cut the number of free transactions that savings bank customers can avail from other bank's Automated Teller Machines (ATMs) from the present five to three a month. It has also allowed banks to charge customers if they use their own bank ATM more than five times a month. New charges will apply for transactions done at ATMs located in six metro centres, namely, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.

"Given the growth in cash access points and taking into account the associated costs of infrastructure to banks and the economy more generally, the Reserve Bank of India has decided to revise the existing directions relating to the use of automated teller machines (ATMs) and charges on their use," Reserve Bank of India said in a statement issued here on Friday. The new norms will come into effect from November 1, 2014. TOI had reported in its edition on August 1st that a move was afoot to reduce the number of free transactions in third-party ATMs.

State Bank of India has been among those lobbying for charges. The bank's chairman Arundhati Bhattacharya had earlier said "The loss from ATMs is very concerning. I would like to roll out many more ATMs. I am ready to do that, but I need to explain also how I am going to sustain this." Bankers said that the new charge structure was aimed at correcting the lop-sided development of ATMs in the country. Banks continued to install ATMs in cities, despite high level of concentration, as these could be used to cross-see other products. However, there was a reluctance to grow the network in rural areas. Bankers said that the move by RBI would reduce the number of transactions in metros and could lead to some level of consolidation.

New charges will apply for transactions done at ATMs located in six metro centres, namely, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. (TOI photo)

This reduction will, however, not apply to customers having no-frills/small/Basic Savings Bank Deposit Account (BSBDA) type of accounts as well as for transactions done by savings bank account holders at ATMs situated outside these six metro centres. Banks are also free to offer free transactions above this mandated limit. "Further, taking into account the scopes for cross-subsidisation and with a view to ensuring more transparency in the pricing of these transactions, banks 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 (not exceeding `Rs 20 plus applicable taxes per transaction) which are decided in a transparent manner," said RBI

"The policy framework of the Reserve Bank has aimed at fostering the growth of non-cash payments. The number of ATMs which stood at a little over 27,000 as at end-March 2007, has increased to over 1.6 lakh across the country by end-March 2014. The Point-of-Sale (POS) infrastructure has increased from 3.2 lakh to 10.65 lakh terminals between end-March 2007 and end-March 2014. It is, however, observed that the development of other payment mechanisms and related infrastructure is more visible in metropolitan areas in the country," RBI said.

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