Customers of some PSBs may not have to pay to use ATMs

The Reserve Bank of India (RBI) has given banks the option of charging their customers for more than for five automated teller machine (ATM) transactions a month, from November this year. However, as a customer-friendly measure, several public-sector banks (PSBs) might not avail of this leeway.

Canara Bank Chairman & Managing Director R K Dubey said his bank was not planning to charge its customers. “I am of the view that the bank’s own customers should not be charged for ATM transactions. I will propose to the bank’s board that these be kept for our customers.”

Banks also believe charging for ATM transactions might deter card usage. “We have been trying to encourage the use of cards instead of cash. For this, people need to visit ATMs rather than coming to our branches. So, we are not in favour of capping free transactions for our own customers, at least initially,” said a senior Punjab National Bank executive.

FREE LUNCHES HERE

• Canara Bank, PNB and IDBI Bank not likely to cap the number of free ATM transactions for their own customers
   
• RBI had earlier given banks the option of charging their customers for more than five transactions a month
   
• The number of free transactions at ATMs of non-home banks (both financial and non-financial ones) was also lowered to three from five
   
• The new rules are applicable from November 1

To encourage customers to visit ATMs, banks have introduced several features, such as bill payments, cash deposits and cheque book request, on these machines.

The Chairman of another mid-sized public-sector bank also said he was not inclined to charge own customers for ATM transactions.

Bankers explained they were unwilling to increase ATM usage charges also because they saw a good customer-acquisition opportunity. “In many cases, customers use cards issued by government banks at the machines of private banks. And, therefore, government banks have to pay a lot as interchange fee (the amount a bank has to pay another if its customer makes a transaction at the latter’s ATM). If a government bank makes ATM usage free for its customers, it will encourage its customers to use the home-bank ATM network. This will help the bank lower its outgo on interchange fees. This is why government banks are not inclined to cap the number of ATM transactions for their own customers,” said a banking expert.

According to RBI data, state-run banks had a network of 116,664 ATMs across the country as of June.