RBI Panel to review ATM Charges

BE/RBINOTE/34/2019

Reserve Bank of India, the Regulator of Banks, has informed that it will be setting up a committee which would review the ATM charges and Fees of Banks.  This was stated in the Developmental and regulatory activities released by RBI along with its monetary along with its bi-monthly monetary policy report for 2019-20.

1. This move is expected to impact the charges paid by customers of other banks who use this facility.
2. It is revealed that the usage of ATMs by public has grown significantly and hence there is a demand for revision of ATM charges and fees.
3. A committee is being appointed which will be headed by all stakeholders and will be headed by Mr. V.G. Kannan, Chief Executive Officer, Indian Banks’ Association and the committee will be submitting its recommendations in 2 months’ time. The composition and terms of the committee will be released in a week’s time.
4. The infrastructure guidelines as per RBI instruction is almost stopped, though there is no negative growth in the ATM Services. This is due to the increased cost involved in upgrading the infrastructure which the Banks are unable to bear at this juncture.
5. The Interchange fee paid by banks for use of ATMs by the customers of other banks has not been revised since 2012 and there is a demand from the banks for revisions of fee from Rs. 15 to Rs. 18 per cash transaction for usage of other banks’ ATMs and for other non-financial transactions they want the fee to be raised from Rs. 5 to Rs. 8.
6. It is noted that banks are allowing their customers 3-5 free transactions for use of other banks ATMs.
7. The increase has been in view of the change in the guidelines of RBI for providing better infrastructure which has otherwise increased the operating cost of ATM by at least 8 to 10 per cent.
8. Since 2017 there is considerable slackness shown in the growth of infrastructure and only 2.07 lakh of devices growth was seen in April 2019 which was lower by 2.08 lakh in March 2017.
9. ATM Industry hopes that their recommendations will be considered favorably which could drive the financial inclusion further, and thus make ATMs available within 5 km radius of every citizen in the country.
10. It may also be noted that a committee headed by Nandan Nilekani on Deepening Digital payments also had pointed out the muted growth in ATM infrastructure and recommended for revision of charges.
11. It is further noted that on an average around 125 transactions are done at an ATM every day and thus the cost is observed to be too high due to high costs of compliance and operations. This in turn has compelled the Commercial Banks to reduce their investments in ATMs, prompting a revision in the costs.

Let us wait and see for RBI’s reaction on this….