RBI approves hike in ATM withdrawal fees starting May 1

Cash withdrawals at ATMs will become more expensive starting May 1, following the Reserve Bank of India’s approval to increase interchange fees. According to reports, the RBI has authorized a Rs 2 rise in the interchange fee for financial transactions, and Re 1 for non-financial ones. As a result, the cost of cash withdrawals will increase from Rs 17 to Rs 19 per transaction, while balance inquiry fees will rise from Rs 6 to Rs 7. This change will primarily affect customers who frequently use ATMs of banks other than their own, as they will bear the higher withdrawal costs.

Also Read: Bidar Rs 93-lakh ATM loot: Police suspect involvement of Bihar gang in the act

What is an ATM interchange fee?

An ATM interchange fee is the charge one bank pays to another for facilitating ATM services to their customers. Typically, these fees are passed on to customers as part of their banking costs.

Impact on ATM withdrawals

For example, customers of Bank A who withdraw funds from an ATM owned by Bank B will be charged a fee by their own bank once they exceed the free monthly transaction limit which is five withdrawals in metro cities and three in non-metro areas.

The revision follows a proposal by the National Payments Corporation of India (NPCI), with white-label ATM operators pushing for the hike, citing higher operational costs. This fee increase is expected to affect smaller banks, which rely more on other banks' ATM networks due to their limited infrastructure.