Do Banks Offer Free ATM Transactions?
ATMs have become the face of digital banking in India. The Reserve bank of India (RBI) has stipulated minimum number of free ATM transactions to be provided by banks to their savings bank customers. This has been in effect from November 01, 2014. However, as part of popularizing ATM culture and also as a customer acquisition tool, many banks have been offering Free ATM transactions, irrespective of number of transactions, without considering whether carried out through own ATM/ WLA/ BLA
The major reason for offering free ATM transactions was that the cost per transaction carried out through ATM was much less compared to same transaction at the branch. Over a period, various operational costs associated with ATMs have increased manifold. Because of increase in the number of robberies aimed at ATM centres, banks have been compelled to strengthen security of ATM centres through physical security and remote monitoring services (RMS). The security measures have increased the cost of operation of ATM centres and many banks have gradually reduced the number of free transactions offered through ATMs. Further, as per RBI norms too, banks are required to offer only limited number of free transactions. However, many customers are still unaware that banks are charging them for ATM transactions.
The RBI has stipulated different number for free ATM transactions depending on the location of ATM centre. The number of free ATM transactions to be offered for On-Us and Off-Us transactions has been stipulated by RBI. Similarly, the number of free transactions to be offered at rural and metro locations has also been fixed by RBI.
Banks are given the freedom to offer free ATM transactions beyond the minimum number stipulated by the regulator. Some banks continue to offer free ATM transactions. Some charges beyond internally decided number of transactions beyond that stipulated by the regulator. Some other banks offer transactions based on the scheme of the account, like salary account, professional account etc. In this model, customers are segmented and free ATM withdrawals are extended to group of customers identified as more remunerative for the bank, based on the average balance maintained and other cross selling opportunities.
Minimum free ATM transactions stipulated by RBI
Transactions at a bank's own ATMs (On-Us transactions) at any location
For On-Us transactions (transactions in own ATMs) in any location, banks must offer a minimum of five free transactions in a month, to their savings bank account holders. This minimum transaction is including both financial and non-financial transactions. Cash withdrawal is a financial transaction. Balance enquiry, mini statement printing etc are non-financial transactions.
Transactions at any other banks' ATMs (Off-Us transactions) at Metro locations
As per RBI norms, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad are treated as metro centres for charges relating to ATM transactions. In these six centres, banks must offer a minimum of three free transactions (including both financial and non-financial transactions) in a month, to their savings bank account holders.
Transactions at any other banks' ATMs (Off-Us transactions) at Non-Metro locations
In any other location, other than the six metro locations mentioned above, banks must offer the savings bank account holders a minimum of five free transactions in a month at other bank ATMs (Off-Us transactions). This number includes both financial and non-financial transactions.
As already mentioned, banks have freedom to offer any number of free transactions beyond the minimum stipulated number.
Further, it shall be noted that transactions in Basic Savings Bank Deposit Account (BSBDA) are subjected to a separate set of norms and hence the above norms do not apply to ATM cash withdrawals from BSBDA accounts. In many banks, ATM cards issued to BSBDA account holders support withdrawals in On-Us mode only.
How to identify metro and non-metro ATM locations?
RBI has given specific instructions to ATM installing banks to indicate clearly at each ATM location whether the ATM is situated in a 'metro' or a 'non-metro' location through appropriate messages. Hence banks have affixed sticker / poster in each ATM centre to enable customers to identify the location and ascertain the availability of number of free transactions.
What is the maximum amount a bank can charge its customers for ATM transactions?
As per the present guidelines, the maximum amount that can be charged to a customer per transaction, beyond free limit, is maximum of 20/- (plus applicable taxes, if any). Since only upper ceiling is provided, there are banks that charge lesser than this. Some banks charge differently for financial and non-financial transactions.
Charges associated with cash withdrawals through credit cards at ATMs / ATMs located abroad
The Reserve Bank of India has given freedom to the banks themselves to stipulate charges associated with cash withdrawals through credit cards and from ATMs located abroad.
To minimize the cost of ATM transactions, each customer should ascertain the number of free transactions offered by the bank for on-us and off-us transactions and also in the specific scheme as applicable to the customer. Contact your bank to ascertain the charges applicable to your card and in your account scheme. Also clarify on the charges applicable for financial and non-financial transactions. The details can be ascertained by contacting the banks over toll free numbers too.
