Cash & Non-Cash ATM Transactions Rules To Change From Next Month

On June 10, 2021, the Reserve Bank of India declared that banks in the nation would increase their charges for cash and non-cash ATM transactions surpassing the free monthly quota effective from January 1, 2022. According to the official announcement of RBI "Customers are eligible for five free transactions inclusive of financial and non-financial transactions every month from their own bank ATMs. They are also eligible for free transactions inclusive of financial and non-financial transactions from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling/cap on customer charges is Rs. 20 per transaction. To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs. 21 per transaction. This increase shall be effective from January 1, 2022."

This means that resident bank customers will have to pay higher charges of Rs. 21 instead of Rs. 20 for cash withdrawals from ATMs. Once the free monthly limit has been surpassed, the new customer charges of Rs. 21 per transaction would be charged from the next month. This charge will be subject to relevant taxes which will be payable in addition.

Some banks have already begun notifying their customers about the scenario. Axis Bank, for example, has issued an alert to its customers, stating that financial transaction fees exceeding the free limit at Axis Bank or other bank ATMs would be INR 21 + GST beginning January 1, 2022.

On the other hand, HDFC Bank has noted on its official website that "With effect from 1st January 2022, ATM transaction charge rate beyond free limit of Rs. 20 + taxes would be revised to Rs. 21 + taxes, wherever applicable."

RBI had also increased the interchange fee per transaction in the month of June 2021. The central bank had allowed an increase in interchange fees per transaction from Rs. 15 to Rs. 17 for financial transactions and from Rs. 5 to Rs. 6 for non-financial transactions in all centres. This shall be effective from August 1, 2021.

Customers of the India Post Payments Bank (IPPB) will have to pay charges for cash deposits and withdrawals commencing January 1, 2022. According to an announcement released by IPPB on November 3, 2021, cash withdrawals, which are free up to 4 transactions per month for a Basic Savings Account, would be charged at 0.50 percent of the total amount, subject to a minimum of Rs 25 per transaction, if the free limit is surpassed.