The Reserve Bank of India (RBI) has announced revised guidelines for automated teller machine (ATM) transaction charges, effectively increasing the maximum permissible fee for cash withdrawals beyond free monthly limits. According to the central bank's latest directive, bank customers may be charged up to Rs23 per transaction for ATM cash withdrawals exceeding free transaction limits beginning 1 May 2025.

 

Understanding Free Transaction Limits

Bank customers will continue to enjoy certain free transactions each month before incurring additional charges:

These free transaction limits remain unchanged, but the cost of exceeding these limits will increase under the new guidelines.

 

Fee Increase Details

The revised fee structure represents a Rs2 increase from the previous maximum charge of Rs21 per transaction, which had been in effect since 1 January 2022. This adjustment reflects the RBI's periodic review of ATM transaction costs and operational expenses.

 

The central bank has specified that these charges will also apply to transactions conducted at cash recycler machines, except for cash deposit transactions which remain exempt from these fees.

Changes to Interchange Fee Structure

 

In a significant policy shift, the RBI has moved away from setting fixed interchange fees between banks. Instead, the new directive states that "the ATM interchange fee will be as decided by the ATM network." This represents a departure from the previous arrangement established in 2021, where the central bank had fixed the interchange fee at Rs17 for financial transactions and Rs6 for non-financial transactions.

 

Context for the Decision

The RBI's decision comes shortly after the Finance Ministry's revelation in the Lok Sabha that most government banks were incurring losses from ATM cash withdrawal operations. This regulatory adjustment appears to address the financial sustainability concerns of ATM networks while balancing consumer access to cash withdrawal services.

 

Banking customers should take note of these changes and plan their ATM transactions accordingly to minimise additional charges when the new fee structure takes effect on 1 May 2025.