IBA seeks fee for withdrawal from non-home urban bank ATMs

The Indian Banks' Association (IBA) has suggested levying a fee on cash withdrawals from ATMs in cities by customers of other banks to help recover increasing costs.

"We have recommended to the Reserve Bank of India imposing a fee for withdrawing money from non-home bank ATMs in urban areas, while no fee has been proposed for transactions in semi-urban and rural areas," IBA Chief Executive Officer M V Tanksale told PTI.

While there is no limit on customers who use their own bank's ATMs, there is a cap of five free transactions for use of ATMs run by other banks. From the sixth transaction, they have to pay Rs 20 for every withdrawal.

The cost of operating ATMs increased after security measures were tightened following an incident in Bangalore in November last year, when a woman employee of Corporation Bank was attacked by an intruder with a machete.

The security arrangements of 1.4 lakh bank ATMs were reviewed, leading to additional costs for manning them.

In November 2013, the government asked banks to review security arrangements at their ATMs as instructed by the RBI.

Subsequently, the IBA set up a sub-committee to look into the entire issue of ATM charges and suggested a levy for usage in urban locations.

According to the IBA, the additional security requirements have pushed up the cost of operating a single ATM by up to Rs 40,000 a month.

Public sector banks had a combined 72,340 branches, of which 37,672 had onsite ATMs, as of March 2013.