NTH :: Banks to allow free use of rival ATMs only thrice per month

Bankers said that the new charge structure was aimed at correcting the lopsided development of ATMs in the country.
TNN | Aug 15, 2014, 03.07AM IST | Times of India


MUMBAI: Banks will allow customers only three free transactions at the automated teller machines (ATMs) of rival lenders from now on. Banks can also cap the number of free transactions at their own ATMs at five. The Reserve Bank of India has allowed banks to charge up to Rs 20 for every transaction beyond the limit.

New charges will apply for transactions at ATMs located in six metro centres — Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad, which are well-served in terms of payment infrastructure.

“Given the growth in cash access points and taking into account the associated costs of infrastructure to banks and the economy more generally, the Reserve Bank of India has decided to revise the existing directions relating to the use of automated teller machines (ATMs) and charges on their use,” the central bank said in a statement on Friday. The new norms will come into effect from November 1, 2014.

Bankers said that the new charge structure was aimed at correcting the lopsided development of ATMs in the country. Banks continued to install ATMs in cities despite high level of concentration, as these could be used to cross-subsidize other products. However, there was a reluctance to grow the network in rural areas. Bankers said that the move by RBI would reduce the number of transactions in metros and could lead to some level of consolidation.

This reduction will, however, not apply to customers having no-frills, small or basic savings bank deposit account (BSBDA) type of accounts as well as for transactions done by account holders at ATMs situated outside these six metro centres. Banks are also free to offer free transactions above the mandated limit.

“Further, taking into account the scope for cross-subsidization and with a view to ensuring more transparency in the pricing of these transactions, banks have been advised to provide their savings bank account holders with at least five free transactions per month at their own ATMs. Beyond this, banks may decide to levy transaction charges (not exceeding Rs 20, plus applicable taxes per transaction) which are decided in a transparent manner,” said RBI

“The policy framework of the Reserve Bank has aimed at fostering the growth of non-cash payments. The number of automated teller machines (ATMs), which stood at a little over 27,000 as at end-March 2007, has increased to over 1.6 lakh across the country by end-March 2014. The point-of-sale (POS) infrastructure has increased from 3.2 lakh to 10.65 lakh terminals between end-March 2007 and end-March 2014. It is, however, observed that the development of other payment mechanisms and related infrastructure is more visible in metropolitan areas in the country,” the RBI said.

Source : http://goo.gl/1dJqdC

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