Fewer Free Transactions On Third-party ATMs

If you are in the habit of frequenting to the neighbourhood ATM (automated teller machine) to withdraw cash for minor reasons, the habit may cost you dear now. The reason is that the number of free transactions from third-party ATMs has been reduced from five to three in a month in six metro cities--Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.

The new rule will not be applicable for customers who have nofrills/small/basic savings bank deposit accounts. Any transaction beyond this limit would invite a charge of up to Rs 20 a transaction.

"The number of free transactions should be seen as a response to the rising costs of ATM infrastructure for banks and a push for customers to shift away from cash towards digital channels. We feel this move will further fuel the digital channels of the banking system," says Brett Morgan, country head, branch banking, ING Vysya Bank.

The Reserve Bank of India has also asked banks to offer at least five free transactions to their own account holders. Beyond this, banks may charge at the most Rs 20 a transaction.

This decision to allow banks to charge their own account holders may lead to differential charges for customers. Fewer free transactions from third-party ATMs means customers will have to be more selective in choosing ATMs.

"They will prefer their own bank ATM over other that of other banks. This will also prevent misuse of free transactions," says A Surendran, general manager and head of retail & international banking, Federal Bank.

"While opening a bank account, a customer should give preference to banks with a large ATM network," says Adhil Shetty, founder and chief executive, bankbazaar.com.