HYDERABAD : The Reserve Bank is revisiting ATM charges and fee, a decade after it first imposed charges on ATM cash withdrawals and other transactions. Prior to 2009, all transactions were free at own bank ATMs. A committee headed by the Indian Banks’ Association (IBA) will examine the fee structure and submit recommendations within two months of its first meeting. “The scope of the study needs to be determined first,” VG Kannan, CEO, IBA, told Express, adding that RBI will issue the terms of reference within a week. Currently, charges vary from bank to bank and based on the ATM network used.
For instance, while state-run SBI, which also has the highest number of ATMs, allows unlimited free cash withdrawals at its own network; private lender HDFC allows only five free transactions. As on April 2019, there were over 2.7 lakh ATMs; in FY17 the number was 2.8 lakh. According to International Monetary Fund, India has the fewest ATMs per 1 lakh people among the BRICS nations. Banks fear that the availability of free services will increase transactions, resulting in higher costs.
Though the cost of servicing customers via ATMs is cheaper than the cost of servicing them at the counter, banks favour imposing limits to contain footfalls. One reason is the increasing operating costs of ATMs due to regulatory changes, including hardware and software upgrades and heightened cash management standards, which has compelled trade body Confederation of ATM Industry to sound a death knell. Last year, it warned that over 1 lakh ATMs would be shut by March, though it did not happen.
The inter-bank ATM networks allow use of ATM cards of one bank in another. Banks owning the ATMs charge a fee, referred to as interchange fee and is recovered by the ATMdeploying bank from the cardissuing banks. For banks with larger ATM network, interchange fee is an important stream of revenue. RBI’s decision to constitute a panel to look into this comes close on the heels of a report submitted to the Banking Ombudsman related to ATM-related complaints.
The group was headed by SBI, along with representatives from NPCI, ICICI, HDFC and Corporation Bank, and analysed issues causing customer inconvenience, delay in redressal and settlement of ATM disputes. Complaints relating to ATM/debit cards shot up a staggering 50 per cent over last year. Of the total number of complaints, 60 per cent was on ‘account debited but cash not dispensed by ATMs’.