RBI proposes a modest hike in customer charges for ATM usage

The RBI has issued new guidelines hiking the charges for ATM usage. The new charges will come into force from January 2022. The RBI’s rationale behind the hike in these fees is that they haven’t been revised since August 2014, when they were last proposed. Will customers agree?

RBI proposes a modest hike in customer charges for ATM usage
ATM user fees changed

THE Reserve Bank of India has proposed a modest hike in the ATM usage fee that is levied on bank customers.

The new fee will become operational from January 1, 2022. Currently banks levy a fee of ₹20 when you have exceeded the number of free transactions.

This fee is proposed to be hiked to ₹21 from January 1, 2022 onwards.

Besides this the user will also have to pay the requisite tax (in the form of Goods & Services Tax (GST) which currently stands at 18%.

An important pointer

The RBI has however said that there would be no change in the number of free transactions a bank customer is eligible to avail.

It would be five transactions (both financial and non-financial) in a month from own bank ATMs while it would be three per month in case of other bank ATMs. This is in case of metro locations.

In case of non-metro locations, the number stands at three (for both financial and non-financial).

Why has the fee been hiked?

The proposed hike in fee comes on the back of the RBI’s decision to hike the interchange fee.

As per the RBI’s instructions, the interchange fee for financial transactions has been hiked to ₹17 from the existing ₹15.

In case of non-financial transactions it is proposed to be hiked to ₹6 from the current ₹5.

The interchange fee is payable when a customer of a bank uses the ATM of another bank. In other words the bank deploying the ATM will levy this on the card issuing bank.

The RBI’s reasoning is that the interchange fees structure was last issued in August 2014 and haven’t since been revised.

What do I do?

There are some methods available to minimise the use of ATMs and save yourself from the burden of having to fork out more for this service.

The RBI is perhaps hoping that post the second wave of COVID-19 infections, the people will continue to use UPI for making payment.

The RBI has also hiked the limit in case of contactless payments from the previous ₹2,000 to ₹5,000.

Additionally one can also use other modes of fund transfer like NEFT or National Electronic Fund Transfer or RTGS (Real Time Gross Settlement).

However there is bound to be some resentment and it remains to be seen if the RBI nudges banks to increase the number of free transactions or not.

Even if the RBI refuses to budge, they could probably accommodate the request for more transactions from the senior citizens. Many of them may not be in a position to afford to pay higher interchange fees.