ATM withdrawal charges to increase from Jan 1: Why has RBI allowed the charges to be increased? 

ATM withdrawals beyond the free monthly permissible limit will pinch the consumers more as banks will levy increased charges on ATM transactions from January 1, 2022. The Reserve Bank of India (RBI) has allowed banks to charge Rs 21 per transaction if customers exceed the permitted number of free ATM transactions.

Customers will be allowed to do three free transactions from other bank ATMs (financial and/or non-financial) in metros and five in non-metros. Customers will be allowed five free transactions (financial and/or non-financial) every month from their own bank ATMs. The central bank has permitted banks to increase the fee for cash and non-cash ATM transactions beyond the free monthly permissible limit in order to offset higher interchange fee and general escalation in costs. 

"To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022," the RBI noted in a circular. Some banks like Axis Bank and HDFC Bank have already told their customers about the fee hike for exceeding monthly free ATM transactions. 

"Effective 1st January 2022, financial transaction fee above the free limit in Axis Bank or other bank ATMs will be INR 21+ GST," Axis Bank’s website read. HDFC Bank, on the other hand, said the ATM transaction fee rate beyond the free limit of Rs 20+ taxes will be changed to Rs 21+ taxes as of January 1, 2022.

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