Following the orders of the Reserve Bank of India (RBI), all the Automated Teller Machines are about to witness a change from Sunday, August 1. As per that, the interchange fees charged by the ATMs will increase by 2 rupees. The order was issued by the central bank earlier in the month of June.
According to the directions of the Reserve Bank of India (RBI), ATM cash withdrawals will now cost 2 rupees more as the interchange fee, which was previously Rs 15 has now been increased to Rs 17. Also, fees on financial transactions have been raised from Rs 5 to Rs 6.
“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022,” the RBI said.
The interchange fee is usually charged for using ATM cards at the machine of other banks. However, a user gets certain free ATM transactions in the home branch ATMs as well as the ATMs of other banks. The number is limited and once the user surpasses the free transaction limit, the interchange fee is charged. According to the revised rules, users will now be eligible for five free transactions every month from their branch ATM. Furthermore, they can also avail free transactions from ATMs of other banks including three from metro cities and five from non-metro cities.
Earlier, a committee was set up by the Reserve Bank of India (RBI) in June 2019 which recommended the changes. Following the suggestions, RBI has now issued the revised rules in view of the increasing cost of ATM deployment and as well as expenses towards maintaining the ATMs machines. The committee was set up under the chairmanship of the chief executive of the Indian Banks' Association to review the overall functioning of ATM machines along with the charges and fees.
The ATM interchange fee has been raised after a time period of 9 years.
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