From today, ATM cash withdrawals may cost more; here’s why

The RBI has allowed banks to hike charges for transactions beyond the free monthly quota, and some banks have introduced the changes

Private sector lenders ICICI Bank, Axis Bank and HDFC Bank have already announced the new increased charges. (Representational image)

The new year has ushered in a new set of ATM rules, which make cash withdrawals and other transactions costlier. The Reserve Bank of India (RBI) has allowed banks to increase charges for cash and other ATM transactions from January 1, 2022.

This means once you use up your monthly quota of free ATM transactions, you will have to shell out more for further transactions. Private sector lenders ICICI Bank, Axis Bank and HDFC Bank, for instance, have already announced the new increased charges — the information is available on their respective websites.

What’s changed at ATMs

Starting Saturday, January 1, bank customers have to pay ₹21 per transaction, against the earlier ₹20, once they exhaust their monthly quota of free transactions.

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“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 ₹21 per transaction. This increase shall be effective from January 1, 2022,” said an RBI circular dated June 10, 2021.

It may be noted that in all, customers are eligible for five free transactions — including cash and non-cash — every month from their own bank ATMs. At other bank ATMs, too, they are eligible for a few free transactions — three in metro centres and five in non-metro centres.

The RBI made the changes on the recommendation of a panel it had constituted in June 2019. The committee, chaired by the Chief Executive of the Indian Banks’ Association (IBA), reviewed all the ATM charges, particularly the interchange structure.

New locker rules

Some more key changes introduced by the RBI also kick in from January 1. For instance, under new locker rules, banks cannot disown liability if the contents of a locker are lost due to theft or fraud by employees. According to an RBI notification dated August 18, 2021, the bank’s liability in such cases stands at 100 times the prevailing annual rent for the locker.

Also, banks are required to warn customers that they are not responsible for insuring the locker contents. Further, to thwart coercive insurance sales, the RBI has said banks cannot sell locker contents insurance to their locker customers.

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