Surcharge on use of ATM network goes

30 March 2009

From 1 April, people will be able to use the automated teller machine (ATM) of any bank to withdraw cash or check their bank balance, at no extra charge. This is thanks to new Reserve Bank of India guidelines allowing free access to ATMs. 

Earlier it was feared that the move may prompt banks to go slow on ATM expansion, in view of the fee from customers disappearing. But as Moneycontrol reports, this does not seem to be the case, as most banks plan to continue with their ATM expansion. 

This is because the interchange fee, which is paid between banks, will continue to exist. So the RBI move could prove to be advantageous for banks with large ATM networks. They could earn more fee income as customers of other banks would access their ATMs. The interchange fee is between Rs 15 and 20 per transaction. 

Sanjeev Patel, head, direct banking channels, HDFC Bank, said his bank, which has about 3,500 ATMs, is not planning to go slow on ATM expansion. ''We are a big acquirer. We have a large distribution network and this will benefit us. It is unlikely that my customer will move out. Other banks' customers will come to us,'' he said.

Hemant Kaul, executive director retail banking, Axis Bank, said that the beneficiaries of the RBI guidelines would be large banks who have invested money in setting up their own ATMs. The number of ATM transactions per debit card would also register an increase, he added. 

Axis Bank, which added close to 400 ATMs this quarter, will have a network of around 3,600 by this fiscal. For both HDFC Bank and Axis Bank, around 15 per cent of ATM transactions are from customers of other banks.