The Hindu : Business : Proposal to lower ATM charges

Online edition of India's National Newspaper
Tuesday, Dec 25, 2007
ePaper

Business

Business

Proposal to lower ATM charges

RBI releases draft paper on fair pricing of ATMs

— FILE PHOTO

PLASTIC MONEY: An ATM cardholder transacting business at one of the ATM centres.

MUMBAI: Coming to the aid of bank customers who are charged an unreasonable fee, sometimes as high as Rs. 57, for using ATMs of other banks, the Reserve Bank of India on Monday proposed a ceiling of Rs. 20 on such transactions.

The RBI, in its draft notification, has also prohibited banks from charging any fee from customers for using ATMs of other banks for services like balance inquiry.

At present, banks charge up to Rs. 57 per transaction from customers who use ATMs of other banks for cash withdrawal and balance inquiry, the RBI said in its draft approach paper on Fair Pricing and Enhanced Access of Bank ATMs. While prohibiting the banks from further increasing the ATM charges, the draft paper said that they would have to reduce the transaction fee to Rs. 20 per transaction by the end of the current fiscal (March 31, 2008).

Also, the banks would be required to do away with charges for services like cash withdrawal with effect from April 1, 2009, the draft added.

The central bank has invited comments from interested stakeholders by January 31 next year on its draft paper which seeks to establish a fair and transparent framework for levy of service charges for bank ATMs.

ATM network

There are 31,078 ATMs in the country and the banks owning these ATMs charge a fee for providing the facility to the customers of other banks.

The draft paper said that interchange fee which is recovered from the card issuing bank is not fixed across banks and depends on the terms of bilateral or multilateral arrangements.

Banks with larger ATM network treat interchange fee as an important source of revenue, the RBI paper added. Making a case for uniform charges for using ATMs of other banks, the RBI said, the practice of levying different charges discourages the customer from using the ATMs of other banks. Referring to the international experience, the RBI paper said that in countries like the U.K., Germany and France, bank customers have access to all ATMs in the country free of charge except when the cash is withdrawn from white label ATMs (ATMs not operated by banks) or from ATMs managed by non-banking companies.

The effort, the RBI said, should be to have a system allowing access to ATMs installed in the country free of charge through an equitable cooperative initiative by the banks. — PTI

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section