Delhi High Court dismisses PIL against cap on free withdrawals from ATMs

The Delhi High Court has dismissed a PIL against the cap on free-of-charge withdrawals by banking customers from own bank ATMs, saying it was a policy decision.

A bench of Chief Justice Rajendra Menon and Justice V K Rao on Thursday said the ATM facility provided by banks have lot of overhead costs, like salary of guards and power consumption charges, and therefore, there cannot be unlimited free ATM transactions.

"They have to maintain the ATMs and there would be establishment costs," the court said, adding that it would be "disastrous" if banks close the ATMs due to its interference in the issue.

As per the Reserve Bank of India's new guidelines, bank customers in six metros -- Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengaluru -- are allowed to withdraw money free of charge only five times a month from the ATMs of their banks and will be charged Rs 20 for every subsequent transaction.

The court said Rs 20 for every additional transaction in a month can be afforded by a banking customer and dismissed the petition, filed by lawyer Swati Aggarwal, seeking directions to allow unlimited number of free transactions for banking customers at the ATMs of their banks.

In her PIL, Aggarwal claimed that the guidelines were issued at the behest of a few banks and IBA (Indian Banks Association) which had approached the RBI seeking changes in the extant instructions regarding free transactions at other banks' Automatic Teller Machines (ATMs).

It alleged that levying charges was highly "arbitrary and unjustified" besides being "discriminatory and against good banking practices and reforms and a backward move".

"In almost all modern economies of the world, there is no cap on the number of transactions one can make on own bank ATM and unlimited number of transactions remain free of charge on their own bank ATMs," the petition said.

It contended that the RBI decision contradicts its own circular dated March 10, 2008, whereby it had "justified and given directions allowing the free usage of ATMs for unlimited number of transactions on own bank ATMs".