How Will Return of ATM Fees Help Cash-Strapped People?

In absence of any direction by the RBI, banks are expected to go back to charging between Rs 15-20 per transaction.

People wait outside ATM kiosks after Prime Minister Narendra Modi announced demonetisation on 8 November 2016. (Photo: IANS)

In the wake of the cash crunch that has been brought about by demonetisation, customers are reportedly upset that the government has decided against continuing the waiver on ATM usage and debit card transaction fees till the situation is normalised.

Speaking to The Times of India, Naroze Dastur, managing director of NCR Corporation said:

The industry was expecting the waiver (on ATM transaction charges) to continue even after 31 December.

Also Read: ATM Withdrawal Limit Raised From Rs 2,500 to Rs 4,500 From 1 Jan

Following the expiry of the 50-day deadline to deposit demonetised currency in banks, the Reserve Bank of India (RBI) on Friday relaxed the daily ATM withdrawal limit to Rs 4,500 from the earlier cap of Rs 2,500, effective from 1 January.

However, the central bank remained silent on ATM transaction charges. In the absence of any direction by the RBI, banks are expected to go back to charging between Rs 15-20 per transaction, reports The Times of India.

The first five transactions will be free of cost. After that it will be left to the discretion of the banks and the card category of the customer. Banks generally have an agreement with individual customers on charges levied. Many banks were not charging premium customers before demonetisation.

V Balasubramanian, President, Transaction Processing and ATM Service, FSS

A man walks past a State Bank of India ATM in Mumbai. (Photo: Reuters)

Cash is not freely available. Approximately 20 percent of ATMs are operational. The government should seriously look to subsidising digital transactions by creating the Dipayan fund, as recommended by Ratan Watal. Since going digital is a forced measure, customers should not be bearing the full cost of it. 

In addition, many customers have complained that merchants on many occasions have not passed on the benefits of the relaxation on MDR (merchant discount rate).

Starting 1 January, the RBI has said that MDR on transactions will be capped at 0.5 percent for transactions up to Rs 1,000, and 0.25 percent for Rs 2,000. But merchants need not necessarily pass on the discount to customers, said payment companies.

(Source: The Times of India)