Proposal aimed at passing on security costs, say bankers

Free withdrawals at ATMs may soon become a thing of the past. To make good the expenses incurred on beefing up security, banks are considering levying a charge on all ATM transactions, be it a cash withdrawal or a balance enquiry.

With the police in various States insisting that ATM kiosks have security guards 24x7, CCTV cameras inside and outside the kiosks, and video footage to be preserved for at least six months, bankers say the costs will more than double.

The security concerns have been triggered by the recent lethal attack on a woman customer in an ATM booth in Bangalore. Most of the over 1,00,000 ATMs in the country neither have round-the-clock guards nor surveillance cameras.

Currently, all transactions by customers at their bank’s ATMs are free. The first five transactions in a month at other ATMs are also free.

“Hiring trained guards for three eight-hour shifts, procuring arms licences, installing cameras inside and outside the ATM and connecting alarms to the nearest police station will have huge cost implications for banks,” said a senior public sector bank official.

Discussions on fee

Banks are now in discussions with the Indian Banks’ Association (IBA) to arrive at the fee to be levied and the modalities relating to enhancement of security.

Further, to cut costs, they are also considering the feasibility of having operational hours, say from 8 a.m. to 8 p.m., for some ATMs, which either do not have footfalls at night or are in locations that are sparsely populated.

“We are all working on the modalities through the IBA. There are issues, such as competition and ATM spread, which have to be taken into consideration before arriving at a decision,” R.R. Sharma, Chief General Manager, Canara Bank, told Business Line on Wednesday.

According to initial estimates, the cost per transaction works out to Rs 6 on the basis of an average of 200 transactions in each of the 100,000-plus ATMs across the country, Sharma said. However, the individual cost structures for banks might wary.

“But definitely, it will be a significant cost for banks, which can impact profitability. Every branch should have an ATM and there are some ATMs that are not frequented by many customers. Providing security at these would be expensive,” said M. Anjaneya Prasad, Executive Director, Syndicate Bank.


Banks are worried. If the 100,000 ATMs have 20 million transactions a day that means 600 million transactions a month.

So, if each transaction costs Rs 6, the total expenditure for banks would be Rs 360 crore a month. If the proposal goes through, this cost would have to be borne by customers.

Imposition of any fee would mean the end of free ATM usage for customers. “Already we just have five free transactions in ATMs of other banks. While this itself is not justified, how can we be made to pay for security at ATMs?” questioned H. Phaneedra, a customer.

Bankers are, however, hoping that the Reserve Bank of India will give its nod to levy charges on ATMs transactions.

(This article was published on December 12, 2013)
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