ATM cash withdrawal rules to change from Jan 1; check free transaction limit, new charges here

Customers will have to pay more if they exceed the free ATM transaction limit from January 1, 2022 as Reserve Bank of India (RBI) has decided to hike the charges on withdrawals for every public and private bank. The central bank has permitted banks to increase charges for cash and non-cash ATM transactions beyond the free monthly permissible limit.

Here are key things to know about new ATM withdrawal charges:

So, what new charges will customers be required to pay?

According to the RBI notification, customers will have to pay Rs 1 more than what they were paying earlier to withdraw money. Cash withdrawal fee through debit card or credit card of any public or private sector bank will now cost Rs 21 per transaction from the existing Rs 20.

Over and above this amount, there is also a tax under the goods and services tax (GST) regime.

When will the hiked charges be applicable?

The hiked charges will be applicable once the free monthly limit gets exhausted. This will come into effect from the new year.

And, how many free monthly limits will be allowed?

The customers will be allowed five free transactions, including financial and non-financial ones on a monthly basis from their own bank ATMs and they will be able to conduct three free transactions from ATMs of other banks in metro cities and five in case of non-metro cities.

Banks would be able to levy charges on customers within this ceiling, once they exhaust the free transaction limit.

Why has RBI allowed banks to hike ATM withdrawal charges?

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, RBI had said in a statement.

RBI had constituted a committee in June 2019 under the leadership of VG Kannan, Chief Executive, Indian Banks’ Association to review the ATM charges and other fees related to interchange structure for ATM transactions. These revisions in charges have been done after a comprehensive revision of the recommendations of the committee.

The apex banking institution in its statement also said that the structure of interchange fees was last revised in August 2012, while customer charges last saw a change in August 2014.

So, have banks started notifying the customers about the same?

Yes. Banks have started notifying their customers about the change on their website.

According to the HDFC Bank website, the ATM transaction charge rate beyond the free limit of Rs 20 + taxes will be changed to Rs 21 + taxes as of January 1, 2022.

As per the Axis Bank website, “Effective January 1, 2022, financial transaction fee above the free limit in Axis Bank or other bank ATMs will be Rs 21 + GST.”

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