Come October 2009, the free ride to ATM’s will be restricted.
The Apirl 1, 2009 RBI directive to Banks to remove all charges for ATM Transactions, irrespective of Customer’s Base Bank, seems to be causing havoc in Banks.
As mentioned in my posts
the number of low-value transactions, is the reason for the cap on free ATM Transactions.
It is understood, that Reserve Bank (RBI) has fixed third-party ATM withdrawal at Rs 10,000 each time they are used and the number of such transactions to five a month.
It is also understood that IBA had recommended a minimum limit of Rs 1,000 on third party ATM withdrawals, this was rejected by the Reserve Bank to protect the interest of small withdrawer.
IBA, which is the industry lobby of Indian banks, had submitted its recommendations to the central bank last month citing the financial burden faced by banks on account of huge number of third-party usage and small-ticket withdrawals.
RBI, which had made third-party ATM transactions free from April this year, has informed the Indian Banks' Association (IBA) in a communication. This decision is expected to be implemented shortly.
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The highlights are
01) Number of Free Transactions on 3rd Party ATM’s - 5 per month.
02) Maximum Withdrawal per transactions on 3rd Party ATM - Rs10,000/-
03) Transaction fee subsequent to the Free Transactions - Rs20/- per transaction.
04) As per IBA, it is left to the Individual Banks to charge their customers for 3rd Party ATM Usage or not.
05) The Decision is to be implemented from October 2009.
My suggestion is : -
01) The number of Free Transactions-per month be 10, and the maximum withdrawal per transaction be Rs.5000/-.
02) Indian Banks Association (IBA) should start a campaign highlighting the benefits of Debit Cards at Merchant Establishments. One of the reasons for the low usage of Debit Cards at Merchant Establishments is the Transaction cost, of 1.5-2% charged by the Merchants.
One nagging doubt, why did not the Indian Banks Association (IBA) or the Member Banks, did not foresee the deluge of Transactions on ATM’s, once the transactions are free.
Switch over to Debit Cards-Reduce the Load on ATM’s
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