Mumbai, Feb 18 (UNI) In a significant development Reserve Bank of India today announced that ATM withdrawals would not attract any charge from the Banks.
RBI Deputy Governor V Leeladhar speaking at a function organised by the union bank of India to celebrate its 2001st branch under Core Banking Solution (CBS) said that at present many banks are levying charge on withdrawal of cash from their ATMs by customers of other banks with which it has no tie up.
''These costs are at times ridiculous as even for withdrawal of a paltry sum of Rs 500 from ATM the customer has to shell out as much as Rs 250,'' he observed.
He said before moving to a system of cash withdrawal from ATM without cost, as was prevalent in United Kingdom and many other countries, from financial year 2009-10, the RBI has decided to allow only Rs 20 per transaction for such withdrawal from April 1 next.
''The commercial banks are racing against each other to post hundreds of crores of rupees as profits and therefore they must not be fussy about meagre costs involved in cash withdrawal from their ATM by customers of other banks'' , he said adding that even the cost involved in installing an ATM has come down from Rs 30 lakh to Rs six lakh.
Subsequently the RBI in a release said that the draft circular to banks giving effect to the new proposal has been circulated for public views.
The letter seeking to withdraw ATM fees for cash withdrawal said that as on October 2007 the total number of ATMs deployed in the country were 31,078. Commensurate with the branch network, larger banks have deployed more ATMs.
The apex bank in the draft letter said the charges levied on the customers vary from bank to bank and also vary according to the ATM network that is used for the transaction. Consequently, a customer was not aware, before hand, of the charges that would be levied for a particular ATM transaction, while using an ATM of another bank.
This generally discourages the customer from using the ATMs of other banks. It is therefore essential to ensure greater transparency.
The RBI said countries such as UK, Germany and France, bank customers have access to all ATMs in the country, free of charge except when cash is withdrawn from white label ATMs or from ATMs managed by non-bank entities. There was also a move, internationally, to regulate the fee structure by the regulator from the public policy angle. The ideal situation is that a customer should be able to access any ATM installed in the country free of charge through an equitable cooperative initiative by banks.
Based on the feedback from the public a framework of service charges would be implemented by all banks. According to the proposed framework use of own Bank ATMS for any purpose would be free from charges with immediate effect. Similar would be the case of use of other Bank ATMs for balance inquiries. For use of other bank ATMs for cash withdrawals no ban should increase the charge prevailing as on December 23, 2007, when the RBI had released the approach paper.
Banks which were charging more than Rs 20 per transaction shall reduce the charges to a maximum of Rs 20 per transaction by March 31. The same would be made free with effect from April 1, 2009.
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