Delhi HC questions RBI, IBA and SBI on new ATM rules

The Delhi High Court has questioned the Reserve Bank of India's decision to put a cap on banking transactions by customers using their ATM cards, saying account holders were being ''unnecessarily taxed''.

The new guidelines by RBI limits free banking transactions through ATMS in the six metros of Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore at five times a month and every transaction beyond this limit will be charged Rs20 per use.

The five transactions limit is applicable for bank's own ATMs while it is three for use of ATMs of other banks.

A division bench of chief justice G Rohini and justice PS Teji issued notices to RBI, Indian Banks' Association (IBA) and the State Bank of India while fixing the matter for hearing on 18 February.

''Why are you unnecessarily taxing your own account holders. File your response by next date of hearing,'' the bench said.

The High Court was hearing a public interest petition filed by advocate Swati Aggarwal, seeking directions to allow banking customers to make unlimited number of transactions free of any charge on own bank ATMs.

The new guidelines came into force on 1 November and have already been implemented by several banks, including State Bank of India, the country's largest lender.

The PIL claims that the guidelines were issued at the behest of a few banks and the IBA, which had approached the RBI seeking changes in the extant instructions regarding free transactions at other banks' ATMs.

The plea contended that levying of charges was highly "arbitrary and unjustified" besides being "discriminatory and against good banking practices and reforms and a backward move".

It also said that the RBI guidelines were against international practices in relation to use of own bank ATMs followed across the world.

"In almost all modern economies of the world, there is no cap on the number of transactions one can make on own bank ATM and unlimited number of transactions remain free of charge on their own bank ATMs," it said.