Depositors’ body flays banks’ move to charge for ATM use by non-customers

The All India Bank Depositors’ Association (AIBDA) has panned the proposal by banks to deny customers the convenience of a maximum of five free transactions in a month at ATMs of other banks.

According to Ashok Ravat, Honorary Secretary, AIBDA, the Reserve Bank of India and the Banking Codes Standards Board of India should intervene in the interest of consumers to thwart the efforts by banks to levy charges on non-customers who transact at their ATMs.

At present, savings bank account holders can transact a maximum of five transactions free at ATMs of other banks in a month, which is inclusive of all types of transactions, financial and non-financial.

From the sixth transaction onwards, the customer is charged about ₹20 a transaction.

Ravat said the Association wants status quo with regard to the number of free ATM transactions.

To help banks recover increased costs due to the requirement to provide round-the-clock security at ATM kiosks, the Indian Banks’ Association has sought the Reserve Bank of India’s approval to impose a fee on customers in urban areas for withdrawing money from ATMs of banks in which they don’t have an account.

However, there will be no charges for transactions in semi-urban and rural areas.

Pointing out that depositors provide banks with the raw material (deposits) to conduct their business (for giving loans and making investments), Ravat said it would be unfair to levy charges on customers who conduct transactions at the ATMs of other banks.

Besides providing convenience to customers, banks have installed ATMs so that pressure on branches eases and the staff can conduct more meaningful business.

Unfair measure Further, due to the convenience of withdrawing money anywhere and anytime, customers’ maintain higher balances in savings bank accounts.

This is beneficial for banks as these low-cost deposits not only support loan growth but also boost their margins.

If the RBI gives its assent to the IBA proposal, banks may see customers queuing up at the branches for transactions, defeating the purpose of installing ATMs.

Reacting to the proposed move, BSS Reddy, a customer with a public sector bank, said “Now, my own bank’s ATM is not conveniently located. So, I withdraw money from another bank’s ATM, which is closer home.

“If banks begin levying charges for such transactions, I may go back to old world banking, queuing up at the branch for routine banking transactions.”

According to RBI data, as at April-end 2014, there were 1,62,543 ATMs across the country and the transactions at these ATMs aggregated to ₹1,74,346 crore in April.

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