The Reserve Bank of India rolled out a policy in August 2014, pertaining to the amount and the number of ATM transactions offered by banks for free of charge. This article talks about the number of ATM transactions that one can make at his own bank ATM and at other bank’s ATM. What are the charges that one would have to pay if one uses more number of ATM transactions.  How to avoid or reduce ATM transactions.

From 1 Mar 2017, Cash withdrawals and deposits at bank branches of HDFC Bank, ICICI Bank and Axis Bank will now attract Rs 150 minimum charge after four cash transactions.  150 cash withdrawal charge does not apply to ATM transactions Some say the move is for discouraging cash transactions and furthering the digital payment drive.

Customers will still continue to get at least five free ATM cash withdrawals at their bank ATMs and three at ATMs of other banks in the six metros, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.

HDFC Bank Customers and Cash Transaction at Bank Branch

• HDFC Bank has reduced free cash transactions at bank branches for customers from five, to four.
• It has also raised the charges for transactions in excess of this limit for its savings and salary account holders from Rs. 100 to Rs. 150.
• HDFC customers will also have to pay a transaction charge of Rs. 5 per thousand or a minimum of Rs. 150 for cumulative cash transactions at their home branch exceeding Rs. 2 lakh in a month.
• At non-home branches, HDFC customers can deposit or withdraw up to Rs. 25,000 rupees per day from any branch other than home branch but will have to pay Rs. 5 per thousand – or at least for transactions over Rs. 25,000 in a day.

Changes in Number of ATM transactions

There have been changes in the number of ATM transactions from 1 Nov 2014. An overview of the change in Number of ATM transactions are discussed in the article.

• RBI has imposed a limit of 3 transactions per month from ATMs of other banks and 5 from the same bank in six metropolitan cities.So, you are allowed eight free ATM transactions, (five at your bank branch ATM and three at other banks ATMs).
• The six metropolitan cities are Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.For non-metro users, the number of free transactions at other bank ATM will remain 5.
• ATM transactions don’t necessarily have to be money withdrawal. Even non-financial instructions such as balance enquiry, chequebook request, and mini-statement request will be included in this limit
• The Reserve Bank of India (RBI) also made it clear that the said reduction will not apply to small/no frills/basic savings bank deposit account holders.
• Beyond the permitted numbers of transactions for using Automated Teller Machines (ATMs)  a customer will be required to pay a maximum fee of up to Rs 20 plus service tax  for financial transaction and Rs 8.5 plus service tax for non-financial transactions.  Non-financial transactions include checking the balance, cheque book request and so on. For example If your sixth ATM transaction in a month is cash withdrawal, then you will be charged Rs 22.47. If it is a cheque book request you will be have to pay Rs 9.55.
• The new guidelines came into effect from November 1, 2014.  Though the RBI regulation is in place, banks still have the right to decide whether they want to charge their customers.  SBI brought this into effect from 1 Nov but there are some leeway based on type of accounts. But some banks like HDFC Bank , Axis Bank will bring it in effect from 1 Dec 2014.
• The central bank has asked lenders to ensure fair and transparent information to customers regarding the new charges with regard to ATM withdrawals beyond the stipulated cap. It has also asked banks to put in place proper mechanism to track such transactions and that no customer inconvenience or complaints arise on account of this. Further, RBI said that banks should clearly indicate the location of an ATM as metro or non-metro to enable customers identify status of the ATM in relation to availability of number of free transactions.

Though the RBI regulation is in place, banks still have the right to decide whether they want to charge their customers. As per the regulations, it is mandatory for banks to intimate their customers about any changes in service charges and fees. This means it is time to pay more attention to e-mails and SMSs from your bank. You can also visit the bank’s website to know the charges since it is mandatory for every bank to publish the changed service charges.

Why is there a limit on number of transactions?
The Reserve Bank said the cap on the number of free ATM transactions have been imposed in view of the growing cost of ATM deployment and maintenance incurred by banks and also in view of rising interchange outgo due to free usages. SBI,  had reported a loss of nearly Rs 400 crore by way of paying other banks as interbank ATM usage in FY14.

As per latest data from the RBI, at the end of June quarter there were 1,66,894 ATMs in the country. With 44,929 machines, SBI is way ahead of its nearest rival Axis Bank by more than three times or over 27 per cent of the market. SBI has 12.59 crore cardholders and accounts for 31 per cent of the 40.9 crore debit cards in the country and its cardholders are responsible for over 41 per cent of all ATM transactions

For details on why there is a change in number of free ATM transactions one can read official RBI circular Usage of ATMs – Rationalisation of number of free transactions

Banks and ATM Transactions

Though the RBI regulation is in place, banks still have the right to decide whether they want to charge their customers. Some of the banks and their decisions on ATM transactions are given below.

SBI and ATM Transactions

From 1 November, State Bank of India has set a monthly limit on the number of free financial and non-financial ATM transactions.

• The bank has linked monthly balance with ATM charges.
  • If your average monthly balance is over Rs.1 lakh, there is no limit.
  • If it’s up to Rs. 25,000 in the savings account, you will have only five free transactions at your own-bank ATM and three free transactions at other-bank ATMs in a metro city.
• Charges are Rs 5-20 per financial transaction and Rs. 5-8 for non-financial ones depending on the type of account.
• Free ATM service for basic savings bank deposit account holders will continue.
• The bank also stated that it will allow one-way inter-changeability between branch transaction and ATM transaction. For instance, a customer will be allowed nine free transactions at own-bank ATMs if she does not visit the branch at all during a month or eight free ATM transactions if she visits the branch once, and so on.

HDFC Bank and ATM Transactions

HDFC Bank Ltd has stated on its website that, effective 1 December, savings and salary account customers will be allowed first five transactions free across all cities at own-bank ATMs. In the six metros, first three transactions will be free at the non-HDFC Bank ATMs. In non-metros, first five transactions will be free. Anything over this limit will be charged.

Axis Bank and ATM Transactions

From 1 Dec 2014, Axis Bank will also charge Rs 20 and taxes for financial transactions and Rs 9.5 for non-financial ones. Axis Bank is offering 10 free transactions for its Prime Plus savings account and Prime salary account holders. But both these account holders need to have a minimum opening balance of Rs 1 lakh and they can have first five free transactions at non-home bank ATMs.

Other Banks and ATM Transactions

If you are with a smaller bank, chances are that you will continue to get free ATM service. Banks such as Yes Bank Ltd, Federal Bank Ltd have decided to continue giving free ATM services. Kotak Mahindra Bank, too, has decided not to revise charges.

Some banks, however, continue to allow free transactions, for a limited period.  For example Canara Bank has stated that it is not charging for transactions at own-bank ATMs. But more than three transactions at other-bank ATMs in the six metros and beyond five in other places are chargeable, Rs. 15 for every financial transaction and Rs. 5 for every non-financial one. Service tax will also be applicable.

Table below shows the Number of ATM transactions at different banks.

How to avoid ATM