Charges On Cash Withdrawals At ATMs To Hike From Next Month

Customers will have to incur higher fees if they surpass the free ATM transactions limit at their bank branch beginning January 1, 2022, while some banks have already commenced increasing their financial transaction charges. The Reserve Bank of India stated in June that Indian banks are permitted to impose fees on cash and non-cash ATM transactions that exceed the free monthly limit for banking customers. This rate adjustment will go into effect on January 1, 2022.

In a circular released on 10th June 2021, the Reserve Bank of India (RBI) had said that "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. Applicable taxes, if any, shall be additionally payable."

According to RBI, these instructions shall also apply to transactions done at Cash Recycler Machines (other than for cash deposit transactions).

Keeping the RBI's standards in mind, individuals would have to pay Rs 21 per transaction, rather than Rs 20, if they surpass their monthly limit of free transactions, commencing from next month. Here the free transaction limit means resident banking customers can conduct five free transactions (including financial and non-financial) at their own bank ATMs per month. And also they can make 3 non-chargeable or free withdrawals from other bank ATMs in metro areas and five in non-metro locations. Already, Axis Bank, ICICI Bank, HDFC Bank and also India Post Payments Bank have raised their financial transaction fees to Rs. 21, going to effect from January 1, 2022.