Banks ask RBI to take a call on ATM fee rise

Banks have asked the Reserve Bank of India (RBI) to take a call on their demand for a rise in user charges for automated teller machine (ATM) transactions.

The Indian Banks’ Association (IBA) wants RBI to put a cap on free transactions at ATMs. At present, a customer can carry out only five free transactions at ATMs (other than his bank’s) a month and each transaction above this is charged Rs 15. But he can transact any number of times on ATMs of the bank where he has an account. The banks have told RBI all transactions above five should be charged even if the customer uses own his bank’s ATMs.

Bankers have sought an increase in the fee of Rs 15 to Rs 18 for all transactions, including non-cash transactions like balance enquiry.

A working group set up to look into this had suggested a rise in charges.

“We have referred the matter to RBI. Banks want to increase the fee to Rs 18 after five free transactions, including own-bank ATMs,” said Mohan Tanksale, chief executive, IBA.

"Even now, five free transactions are enough to meet the withdrawal requirements of most of the account holders. For balance enquiries, SMS is a more convenient option," said Tanksale.

Banks have cited an increase in maintenance cost as the reason for the demand. With a sharp rise in the number of ATMs in the last few years, which is about 140,000 now in the country, per ATM transactions have fallen below 100 a day. Ideally, an ATM should get at least 200 hits daily.

In a statement, IBA has also said all bank branches will have on-site ATMs by March-end this year.

This follows a communication from the finance ministry, which had called upon public sector banks to open ATMs in every branch in rural areas. Banks are, however, sceptical about the viability of ATMs in such locations.

Separately, IBA officials also said they will be shortly sending their official views on RBI’s discussion paper of early detection and resolution of stressed assets.

Some banks have asked for more time for firming up corrective action plan for a stressed loan in 30 days. In addition, banks also want to defer the accelerated provisioning norm – which will be imposed if banks fail to implement measures to address stress, till the economic activity picks up.

Regarding the issue of finance ministry’s advice to public sector banks for entering into insurance broking, IBA officials said, individual bank boards will take a call in thus issue. “Banks having existing agency arrangements or joint ventures in insurance business will have to be carefully evaluate the implications before taking a call on broking business,” IBA said.