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| Free ATM withdrawals face caps from Oct 15 |
| Manojit Saha & Sudeep Jain / Mumbai Aug 29, 2009, 00:23 IST |
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From October 15, customers will not be able to enjoy limitless use of third-party ATMs free of charge.
The Indian Banks’ Association (IBA) today decided to limit the number of free third-party ATM transactions to five per month. In addition, the maximum amount that a customer can withdraw from another bank’s ATM has been capped at Rs 10,000 per transaction. Banks have also been allowed to charge for withdrawals from current accounts at third-party ATMs.
The decision to bring the rule into force from October 15 was taken at a meeting of the IBA in Mumbai today. IBA Chairman M V Nair confirmed the date on which the rule would come into effect. Customers will have to be intimated at least a month before the rule is implemented.
Since April 1, customers have been allowed use of other banks’ ATMs free of charge, in line with a Reserve Bank of India (RBI) directive. However, faced with a surge in the number of transactions and a rise in interchange expenses, banks urged RBI to impose caps on use of third-party ATMs. Every time a customer uses another bank’s ATM, his bank has to pay an interchange fee of Rs 20 to the other bank. Before April 1 this year, this charge was borne by the user.
However, banks will have to implement various technical changes to their ATM networks before the rule can be implemented. Bankers said they would need at least two-three months to prepare for the modifications.
“Banks will have to make modifications in their ATM operations so that every time a user exceeds his quota of five transactions, he gets an alert. For subsequent transactions, the interchange fee will be debited from his account. Banks are not yet ready for these modifications,” said a senior executive of a bank.
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