Free inter-bank ATM use soon

Customers can withdraw cash from any ATM free of cost from April 1, 2009.

The Reserve Bank of India (RBI) today directed banks to permit customers of one bank the free use of ATMs of other banks for all transactions from April 1, 2009. Meanwhile, customers can now walk into any bank ATM and check their account balance free of cost, according to an RBI notification today.

The central bank, in a draft circular on ATMs in February, had proposed that customers should be able to access any ATM installed in the country free of charge through an equitable cooperative initiative by banks.

The central bank had rejected banks' plea to cap the number of free cash withdrawals every month by saying that such a cap was not desirable and not practical. However, banks will have the freedom to fix the service charge on cash withdrawal through credit cards and for ATMs located abroad.

Banks with a large ATM network had cried foul over the free ATM use after RBI had said the use of ATMs of own banks for any purpose and of other banks for balance enquiries should be free of cost with immediate effect. 
 

BONANZA IN THE OFFING Charges for ATM transactions
Date	Service	Charges
With immediate  effect	Use of own ATMs for  any purpose	Free
With immediate  effect	Use of other bank ATMs  for balance enquiries	Free
Dec 23, 2007	Use of other bank ATMs for cash withdrawals	No increase over  prevailing charges
Mar 31, 2008	Use of other bank ATMs for cash withdrawals	Banks to cap charges at Rs 20 per transaction
Apr 1, 2009	Use of other bank ATMs  for cash withdrawals	Free

For withdrawal of cash from ATMs of other banks, RBI has asked them to cap charges at the rates prevailing as on December 23, 2007, and to reduce all charges to a maximum of Rs 20 per transaction from up to Rs 55 charged now from March 31, 2008. It has further directed banks to ensure cash withdrawal from any bank ATMs should be free of cost from April 2009.

As of December-end 2007, the number of ATMs deployed in India was 32,342. RBI Deputy Governor V Leeladhar had earlier indicated that commercial banks, which were raking in huge profits, needed to temper the urge to levy a fee on ATM transactions.

Banks were making profits in the region of Rs 2,000-3,000 crore. Many of them were prompt to announce how they had posted profits higher than those of competing banks every quarter, he had said.

The RBI deputy governor had said banks should do something for clients. The cost of setting up an ATM has come down from Rs 30 lakh a unit a few years ago to Rs 6 lakh now.