Just 3 free ATM withdrawals a month may be a biting reality soon

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Just 3 free ATM withdrawals a month may be a biting reality soon

Posted on : Monday 16th of January 2017

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New Delhi: With government's focus on making India a cashless economy, government is likely to introduce a couple of measures in the budget 2017-18, and one of them is expected to be reduction in free ATM withdrawals slashing the limit to just 3 withdrawals unlike 5 allowed currently.

As per The Economic Times report, this proposal, floated by bankers, was discussed in the pre-budget consultations with the finance ministry, and the feeling was that this is one of the ways to push digital, said people familiar with the matter.

"A proposal to bring down free ATM transactions to three per month has been discussed with the finance ministry, and this is one of the measures being considered to disincentivise use of cash," said the report quoting a senior banker who did not wished to be named.

"Those free transactions were decided during a different era, but things have changed now and we need to change with that," another private banker said. "If only three free transactions are allowed, then people will be inclined to shift to digital transactions."

A customer is allowed to have up to five free ATM transactions every month after which a fee of Rs 20 per transaction plus service tax is applied.

For non-customers, banks offer three free transactions in top six metros — Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad — and five free transactions in the remaining cities. These rules have been there since Nov 2014.

The report added that according to most banks, ATM transactions since November have been sporadic and have fallen anywhere between 10% and 20%. If they drop further, costs will rise making the ATM business unviable.

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