What You Need to Know About the RBI’s New Chargeable ATM Transaction Rule

There is a recent RBI regulation (RBI), which makes excess number of transactions at even own-bank automated teller machines (ATMs), chargeable. As per this new regulation, if you transact more than 5 times a month, even from your own bank’s ATM from November 1^st, your bank is liable to charge you for it. The new rule doesn’t exclude other-bank ATM transactions too; the number has been reduced from three from five. This limit, however, is only applicable in six metros, Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore. Money withdrawal isn’t the only restriction though; even non-financial instructions such as cheque book request, balance enquiry, and mini-statement requests are being included in this limit. Non-metro users can still enjoy five free transactions at other bank ATMs.

Here is everything you need to about the RBI’s new chargeable ATM transaction rule.

How much will it cost?
Banks are either in the process of adopting the change or have already implemented it, while others have set certain conditions. For instance, from November 1^st, State Bank of India has set a monthly limit on the number of free non-financial and financial ATM transactions, and has linked monthly balance to ATM charges. So, for users who have an average monthly balance of over Rs1 lakh, there is no limit on free transaction. But users with up to Rs 25,000 in their savings account will get only three free transactions at other-bank ATMs in a metro city, and five free transactions at own-bank ATMs.

Charges for financial transactions are Rs 5-20 and for non-financial ones, Rs 5-8. This depends on the type of account held. Basic savings bank deposit account holders will continue to enjoy free ATM services.

It has also been stated that one-way inter-changeability between branch transaction and ATM transaction will be permitted. For example, if a customer does not visit their branch during a month, they will be allowed nine free transactions at their own-bank ATM, and eight free ATM transactions if they visit the branch once, and so on.

Some banks are exempting themselves from the rule. For instance, Canara Bank isn’t charging for transactions at own-bank ATMs, but an addition of three transactions at other-bank ATMs in the six metros is chargeable at Rs15 for each financial transaction and Rs 5 for each non-financial one. Service tax will be applicable as well.

Banks in the private banking space are poised to bring in the revised charges from December 1^st. According to the HDFC bank website, from December 1^st onwards, the first five transactions across all cities at own-bank ATMs for salary and savings account customers will be free. In the six metros, the first three ATM transactions at non-HDFC Bank ATMs will be free and in non-metros, the first five will be free. Anything over and above this will be chargeable. Cash withdrawal for instance, is poised to be charged at Rs 20 plus taxes per transaction and Rs 8.5 plus taxes per non-financial transaction. For some basic savings bank deposit accounts, the limit will be five at other-bank ATMs.

On its website, Axis Bank Ltd. has stated the following: “We have revised the number of free ATM transactions, which will be applicable with effect from 1 December. The transaction limits have been revised taking into account the high cost of operation and maintenance of our growing ATM network.”

ATM usage patterns will denote the new limits. The bank will follow the new RBI guidelines for most of its savings accounts. Every financial transaction will be charged Rs 20 and Rs9.55 including tax for every non-financial one beyond the free limit. Some accounts like priority or defense personnel’s salary accounts, ATM transactions will continue to be free.

Smaller banks continue to offer free ATM services
Account holders of smaller banks such as Federal Bank and Yes Bank Ltd will still be able to enjoy free ATM services to own-bank ATM transactions as well as for other-bank ATM transactions.

What your next steps should be
This might be the right time to alter your ATM transaction behavior, especially given these chargeable fees. It is prudent to find out the exact details from your bank before you go down that road.

Despite the fact that the RBI regulation is in place, banks still retain the right to decide if they want to charge their customers or not. According to the regulations, it is compulsory for banks to inform their customers about any changes in fees and service charges. Pay more attention to any correspondence from your bank, such as mail, SMS or email. You could even visit your bank’s website to find out details, as it is mandatory for them to publish these revised service charges.

A total of 8 to 10 free transactions is sufficient enough for an individual. Your options are using mobile or Internet banking for non-financial transactions like balance inquiries or requesting mini-statements, if you want to avoid paying for using an ATM. Services such as these are free of cost on the website. Some banks even offer a free missed call service for balance inquiries. If you're planning on going shopping, why not use your debit card instead of cash? Be mindful of the fact that some retail outlets charge an additional 1-2% of the total amount if you use your debit card.

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