Although use of digital payment is rapidly growing in India, ATM cash withdrawal is still one of the crucial financial services. Recently, RBI has announced that ATM transaction charges will be raised and such will take effect from 1 st May 2025. The objective of this change is to offset the rising operation cost of banks and to maintain ATM network. However, this increase will further burden the general customers in terms of paying the cash withdrawal cost, as it will increase the cost.
ATM Charges And Free Transaction Limit
Under the new rules of RBI, the fee for each transaction made after the limit of free transactions in a month has been exceeded would be ₹ 23 as opposed to ₹ 21 earlier. This increase shall apply to all the commercial banks, regional rural banks (RRBs), cooperative banks and the authorized ATM network operators.
It will allow the customers to have the facility of free transactions up to five times in cities of metro area from the branches of their banks and three times from ATMs in other banks. Simultaneously, five extra free transactions will be permitted in the non-metro areas.
Effects Of Price Increase On Customers
Higher interest rate on this increase shall ost more to the customers who withdraw cash regularly. For instance, if a customer goes over the free limit of a month and conducts five extra transactions then he will have to pay ₹115 more.
Also, in turn, interchange fees charged by the ATM have also been raised to allow banks to overcharge their customers. This shift might have a higher impact in the rural and semi-urban regions that experience low digital penetration of payments and larger cash transactions.
Effects On Banks And Digital Payment
According to the RBI, by increasing this fee, it will encourage digital payments and encourage the customers to use such services like UPI(universal payments interface) and mobile banking. Nonetheless, the experts believe that this increase of ATM fee in rural areas will not result in a decline in dependence on cash transactions but the customers will be under further burden of finances.
Conclusion
The ATM fee hike 2025 will see the customers paying more resulting in higher cost of cash withdrawal. Nevertheless, this move has been made in order to offset the running costs of banks and encourage digital payments. Customers will have to schedule their transactions in such a way they can avoid having to pay extra charges and maximize on available digital payment options.
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