The Reserve Bank of India (RBI) has announced an increase in ATM withdrawal fees, effective from May 1, 2025. As per the latest notification, customers exceeding their free monthly transaction limit will face a fee hike of ₹2 per transaction, raising the charge from ₹21 to ₹23.
Charges at Other Bank ATMs: Currently, customers can avail of a limited number of free ATM transactions at other banks’ ATMs. In metropolitan cities, the cap is three free transactions, while non-metro users are also allowed three free transactions per month. Beyond this limit, users will incur the revised fee of ₹23 per transaction.
Charges at Own Bank ATMs: For transactions made at ATMs belonging to the account holder’s own bank, five free transactions are permitted each month. After exhausting these free attempts, customers will be subject to the revised fee.
Interchange Fees Determined by ATM Networks: The RBI also announced that ATM networks will have the authority to determine interchange fees. Currently, the fee stands at ₹19 per financial transaction, up from the previous ₹17. Non-financial services, like checking account balances or mini statements, are charged ₹6 per transaction.
Understanding ATM Interchange Fees: An ATM interchange fee is a charge that one bank pays to another for providing ATM services. It is a fixed amount applied to every transaction conducted at an ATM that is not operated by the customer’s own bank.
Why the Fee Hike? The decision to increase ATM charges follows requests from white-label ATM operators, who highlighted rising operational expenses. The RBI acknowledged that these growing costs have impacted the viability of ATM operations.
Impact on Smaller Banks: Small banks that rely on the infrastructure of larger financial institutions may face a greater impact from the revised fees. With fewer ATMs of their own, these banks often depend on partnerships to provide ATM access to their customers.
Digital Payments Reducing ATM Dependency: The rise of digital payments has notably reduced the need for cash withdrawals. According to government data, digital payments in India amounted to ₹95.2 trillion in the financial year 2014. By FY23, this figure had surged to ₹365.8 trillion, reflecting a significant shift towards a cashless economy.