On Campus

‘ATM charges will reverse efforts at financial inclusion’

Updated on: Jan 26, 2014
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Do you agree with the proposed move by banks to charge for more than five ATM transactions? Students from IIM, Raipur share their views:

Despite the seemingly pragmatic yet extremely commercial rationale put forward, the proposal is nothing but a travesty. The reason for setting up ATMs was to avoid the bottlenecks which the brick-and-mortar branches had caused. Indian banking has not graduated to a level where transactional demand for money can be satisfied online. Due to this, the flow is bound to be redirected towards the traditional banking set-up. Banks need to stop looking at ATMs as standalone points-of-sale and recognise them as service extensions of branches. ATMs have also become an important medium of financial inclusion, something which will reverse because of such changes.

Jayesh Surisetti

The main argument presented by Indian Banks’ Association (IBA) for restricting withdrawals at ATMs to five per month is the burden of security cost. IBA estimates the cost of providing extra security to be ₹40,000 per month per ATM. The proposal is surprising as providing security at the ATM is the bank’s responsibility by default.

Aashwij Mallya

The proposal of IBA is neither a just nor a financially sound decision. It will not only result in long queues at the banks but also induce people to spend less, thereby hampering growth. According to IBA, banks have to incur an annual additional expenditure of ₹4,800 crore for implementing necessary security measures at more than 1 lakh ATMs in this country. Instead of charging ATM transactions, this expenditure can be shared among 40 crore ATM cardholders, banks and government. An annual fee in the range of ₹70-80 can be levied on those who make more than 60 ATM transactions in a year and rest of the expenditure can be distributed among banks and government.

Arpit Bajpai

ATMs provide cost benefit to banks as they are cheaper than employing manpower to make the transactions. Even the banks encourage the customers to use the facilities provided by the ATMs. Queues of customers in branches will only get longer and hamper the daily operation in the branches.

Sushant Singh

The proposal by the IBA to limit the number of ATM transactions, including those at your own bank, to five per month appears regressive as well as counter-productive. Though the concerns raised by the bankers’ umbrella body appears to be just, the remedy suggested is only likely to increase the burden at the bank’s branches and cause much inconvenience to customers, defying the very logic of having a wide ATM coverage.

The need of the hour is to analyse the past ATM crimes and explore prudent options such as providing a security cover during the non-peak wee hours of the day.

Sukrit Singh

I do not agree with this move of restricting the ATM transactions to five per month. Earlier, there was a cap of five transactions at other banks’ ATMs. There was no cap on the number of transactions from one’s own bank.

Students who do not like keeping a lot of money in hand will face a major problem. Students who stay in hostels would find it unsafe to keep so much money in their lockers.

Businessmen will find it inconvenient too to make transactions, as they need to withdraw a lot of money at a time.

Banks usually have a limit on the amount of money to be withdrawn in one transaction. So in order to withdraw large amounts, he will have to exhaust all five of them at a time. Increasing security at the ATMs is the government’s responsibility, the costs of which should not be passed on to the public.

Poulomi Paul

Published on March 13, 2018

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