Big banking alert! ATM withdrawal charges to increase from January 1, check new rates and other details

From next month, banks will increase charges for cash and non-cash ATM transactions beyond free monthly permissible limit.

New Delhi: From next month, ATM withdrawal is going to pinch the customer's pocket, if they exceed the monthly limit of free transactions.

The Reserve Bank of India had in June permitted banks to increase charges for cash and non-cash ATM transactions beyond free monthly permissible limit from next year. 

"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," the RBI had said in a circular.

New ATM withdrawal charges from January 1, 2022

Bank customers will have to pay Rs 21 per transaction, instead of Rs 20, with effect from January 1, 2022, if they exceed the monthly limit of free transactions.

However, customers will continue to be eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They would also be able to do three free transactions from other bank ATMs in metro centres and five in non-metro centres.

ATMs are deployed by banks for serving their own customers and also provide services to other banks' customers as acquirers where they earn interchange income.

Why has RBI allowed the charges to be increased?

The RBI said the charges have been allowed to be increased given the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks/white label ATM operators, as also considering the need to balance expectations of stakeholder entities and customer convenience.

It is to be noted here that the central bank had set up a committee in June 2019 under the chairmanship of the chief executive of Indian Banks' Association to review the entire gamut of Automated Teller Machine (ATM) charges and fees with particular focus on interchange structure for ATM transactions.

The RBI had said that the suggestions of the panel were comprehensively examined.