New ATM regulations to effect in November 2014

Mangalore Today News Network

Bangalore, Sep 4, 2014: People have a habit of withdrawing small amounts of money from the ATM to curb spending tendencies, but often end up with a high frequency of withdrawals. There are some others who are reluctant to use net banking or mobile banking facilities and depend on ATMs for checking account balance.

If you happen to fall into any of these categories, it’s time to change your habit for good as RBI has issued new rules and guidelines limiting the number of times you use your ATM in a month. The new ATM transaction rules issued by the Reserve Bank of India is applicable to all ATM transactions including withdrawing cash, checking account balance or getting a mini account statement.

New RBI ATM Transaction Rules:   According to the new RBI guidelines that come into effect from 1st November 2014, savings bank account holders in metropolitan cities would be allowed only three transactions from ATMs of other banks and five from the same bank in a month. For any ATM transaction above the stipulated limit, a transaction fee of Rs. 20 would be charged to the account holder.

The new transaction fee is applicable only for people living in six metropolitan cities including Mumbai, Delhi, Bengaluru, Chennai, Hyderabad and Kolkata. People living in smaller towns and other centers would continue to enjoy five free monthly transactions per month from the ATM of other banks and the charges for them include Rs. 20 for each cash withdrawal and Rs 9 for non-cash transactions.

Account holders of zero balance and other no-frills accounts in non metros are exempted from such transaction charges as of now.

What new Rules Mean for Bank Customers:  The transaction fee has been increased from the earlier limit of Rs. 15 and the number of free transactions decreased from five to three for ATMs of other banks. Another important change in the new RBI guideline policy for ATM transaction fee is the fact that all ATM transactions including cash withdrawal, balance enquiry and changing of PIN number etc would be considered as an ATM transaction unlike in the past when balance enquiry was not considered a transaction as such!

A Case for Capping ATM Transaction Limit:  While capping the charges for ATM usage may be an unpopular decision taken by the Reserve Bank of India, the limit in free transactions is justified by the apex body considering high expenses for managing ATMs across the country. With an increasing number of robbery attempts on various ATMs especially in isolated areas and in semi urban and rural areas, the banks have been forced to shell out funds to install a security mechanism apart from using CCTVs and manual security guards wherever possible.

With the Reserve Bank of India laying down strict security guidelines not to leave any ATM unmanned or without security cameras and other measures, banks are facing higher overheads to manage the ATMs.

The inter banking fee charged by various banks through ATM services will also increase since banks are using the fee as an incentive to install more number of ATM machines. While all the above reasons have played their role in the decision to some extent the game clincher has been Reserve Bank of India’s long term plan to promote the use of e-transfers and cashless transactions as much as possible to avoid the use of any black money in the system. The rise in ATM transaction fee is largely seen by financial experts as a sum culmination of all of the above factors.