To understand it better, in case you are a debit card holder of Axis Bank and make the withdrawal request through SBI ATM or ATM machine of some other bank and by chance happen to make a wrong entry in respect of the amount say Rs. 25,000 instead of Rs. 2,500, your request can fail in case the account does not holds that much amount. In the event, a message indicating failure of the transaction due to insufficient funds shall appear on the screen, which we rarely give importance to only to complete the withdrawal transaction. For failure of the transaction due to lack of sufficient funds at another bank ATM also, decline charges are levied on the customer.
Such charges due to customer's mistake are even justifiable but if the transaction failure is due to insufficient funds in the ATM, is it correct to levy a penalty is still the question.
ATM decline charge vary from bank to bank
Banks on their discretion can decide on the ATM decline charges. Some public sector banks including Vijaya Bank do not levy such a charge while many others in the private sector space usually charge base charge plus the service tax as ATM decline charge for each of the failed transaction. The base charge could range anyway between Rs. 10 and Rs. 25 and a service tax can increase the amount to Rs 28 in case a base charge of Rs. 25 is levied by the bank.