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The Reserve Bank of India on Thursday said it will set up a committee to review ATM charges and fees — a move that could impact the charges paid by customers of other banks to use the facility.
“Usage of ATMs by the public has been growing significantly. There have, however, been persistent demands to change the ATM charges and fees,” said the RBI in its statement of developmental and regulatory activities that was released along with the second bi-monthly monetary policy 2019-20.
The committee, which will include all stakeholders, will be headed by VG Kannan, Chief Executive Officer, Indian Banks’ Association. It will submit its recommendations within two months of its first meeting.
RBI Governor Shaktikanta Das said the composition and terms of reference of the committee will be issued within a week.
The announcement comes at a time when ATM infrastructure has seen muted, if not negative growth in the last year along with rising costs, partly due to the new norms for upgrade and security.
Higher operational fee
The interchange fee — paid by banks for use of ATMs by their customers at other banks — has not been revised since 2012. Banks have been seeking a hike of at least ₹3 from the current ₹15 per cash transaction to ₹18 and for other non-financial transactions to be raised to ₹8 from the current rate of ₹5.
Banks typically allow their account holders 3-5 free transactions at ATMs of other banks.
The move, they say, has been necessitated due to the recent norms of the RBI and the Ministry of Home Affairs that, according to estimates, have raised the cost of operating an ATM by at least 8-10 per cent.
The ATM infrastructure in the country has also seen slow growth with just 2.07 lakh such devices in April 2019, down from 2.08 lakh in March 2017.
“We are optimistic that the committee will come out with recommendations to address this critical gap in driving financial inclusion and ensuring the availability of an ATM within a 5-km radius of every citizen in the country,”said K Srinivas, Director, Confederation of ATM Industry.
Muted growth in ATMs
Significantly, the report of the Nandan Nilekani-led high-level committee on deepening digital payments has also highlighted the muted growth in ATM infrastructure and had called for a review of the charges.
“On an average, around 125 transactions are performed at an ATM every day,” it had said, noting that the cost of ATM transactions is high, due to the high costs of compliance and operations. “As a result, scheduled commercial banks have been reducing their investments in ATMs (and reducing their count as well),” the report said, adding that this was an indicator that the ATM operations may not be viable, and that their costs may need to be revisited.
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