New Delhi: The Reserve Bank of India (RBI) in a circular issued Friday lifted the ceiling on interchange fee on ATM withdrawals, adding that the change will come into effect from 1 May, 2025. According to the circular, customers will be eligible for five free transactions each month from ATMs of the bank where they have an account.
For ATMs of other banks, this limit will be three transactions in metro centres and five in non-metro centres. “Beyond the free transactions, a customer may be charged a maximum fee of Rs 23 per transaction,” it said.
The directive, RBI said, was issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
The interchange fee on withdrawals is the amount one bank pays another to facilitate ATM transactions. This fee is passed on to customers.
In the circular issued Friday, the RBI said it constituted a committee in June 2019 under the chairmanship of the chief executive of Indian Banks’ Association to “review the entire gamut” of ATM charges and fees.
Recommendations made by the committee were examined and a decision was made to lift the ceiling for interchange fee on ATM withdrawals and non-financial transactions. The ceiling was earlier lifted from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres in August 2021.
“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 Rs 21 per transaction. This increase shall be effective from January 1, 2022,” said the circular issued Friday.
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