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In Just over a year from now, bank customers can freely use their ATM cards to withdraw cash from any ATM installed by various commercial banks across the country. For now, they can access any of the 32,000-odd ATMs of various banks free of transaction charge for balance enquiry. Also with immediate effect, the Reserve Bank of India (RBI) has barred banks from charging any fees for customers using their own banks’ ATMs and cut charges on withdrawal from third-party ATMs to Rs 20 per transaction.

With RBI issuing a diktat that the cost of using third-party ATMs can’t be passed on to consumers, banks will have to work out some kind of a transfer-pricing structure to defray the costs of those banks that have made huge capital expenditure. ATM service providers say that banks will have to work out the cost of each ATM transaction and net out the charges they have to pay each other based on their network usage.

Since RBI has not got into the details of how the costs will be shared, banks will have to decide amongst themselves a middle path where banks are not completely discouraged from installing new ATMs and yet banks without any network are not fleeced. In a circular issued to all commercial banks and RRBs, RBI said, “The (ATM) 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 is not aware, before hand, of the charges that will 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 central bank went on to say that in countries such as the UK, Germany and France, bank customers have access to all ATMs in the country free of charge, except when cash is withdrawn from white label ATMs or from ATMs managed by non-bank entities.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 is 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,” the circular said. The service charges for the following types of cash withdrawal transactions may be determined by banks themselves. The central bank has clarified that these guidelines do not apply to cash withdrawal with the use of credit cards and for cash withdrawal in an ATM located abroad.

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