The Reserve Bank of India (RBI) has recently announced a change in the rules for withdrawing money from ATM, which will be applicable from May 1, 2025. Under these new rules, customers will have to pay more fees after crossing the free transaction limit. This change will especially affect those who use ATMs repeatedly. In this article, we will discuss these new rules, their effects and measures to avoid them.
The use of ATM has become a daily need of every person in today’s time. Whether to withdraw money or check balance, the importance of ATM is increasing. But now due to the new RBI instructions, withdrawing money from ATM can be overwhelmed on your pocket.
Charge on withdrawing money from ATM: Key things
According to the new RBI rule, customers will have to pay a fee of Rs 23 per transaction after crossing the Free Transaction Limit. The fee was earlier Rs 21, which has now been increased.
A brief description of ATM charge
| key points | Description |
| Free transaction limit | Home Bank ATM: 5 times (both metro and non-matro) |
| Other banks ATM (Metro) | 3 times free |
| Other banks ATM (Non-Metro) | 5 times free |
| Fee on additional transactions | 23 rupees per transaction |
| Balance check fee | Rs 7 per balance check on other bank ATMs |
| Date of implementation | 1 May 2025 |
| Rules on cash recycler machine | Applicable to everyone except cash deposit transactions |
The purpose of RBI’s new rules
RBI has made this change to increase operational cost and promote digital payment. White-labeled ATM operators and banks had long demanded to increase interchange fees as ATMs were increasing spending.
This step will encourage customers to adopt digital payment options such as UPI, mobile banking and internet banking. Also, it will help small and medium banks to improve their network.
Which customers will affect?
- Repeated cash withdrawal customers: Those who use ATMs repeatedly for everyday needs, they will have to pay more fees.
- Customers of small banks: Small banks depend on the ATM networks of large banks, making their customers more charge.
- Cash-based transactions: Those who use cash instead of digital payment will get a shock of this change.
How to avoid extra fees?
The following suggestions can be adopted to avoid additional charges on ATM transactions:
- Use digital payment: Use more options like UPI, mobile banking and internet banking.
- Withdraw more amount at once: Instead of withdrawing money again and again, withdraw more money at once.
- Keep in mind the free transaction limit: Use the ATM of your home bank so that you can take full advantage of the free transaction limit.
- Balance check online: Select online option for tasks like checking balance or removal of mini statement.
- Plan ATM Network: Find and use the nearest home bank ATM as per your needs.
What is ATM interchange fee?
The ATM interchange fee is the amount that one bank gives to another bank to use their ATM network. For example, if you are SBI customers and withdraw money from PNB’s ATM, SBI will have to pay an interchange fee to PNB. This cost will now be charged from customers.
Why were the new rules implemented?
- Operational cost enlargement: ATM operations, cash loading and security measures have increased.
- Promoting digital payment: Encouraging digital payment options by reducing cash transactions.
- Demand for banks: White-labeled ATM operators and small banks had demanded to increase the fee.
Impact on customers
- Small and middle class consumers will have to be careful in cash management.
- Those adopting digital payment options will benefit as they can avoid additional charges.
- People living in rural areas will be more affected as there are limited digital payment options.
conclusion
These new rules implemented by RBI will motivate customers to reduce cash transactions and adopt digital payments. However, this step can be challenging for those who often use cash.
Customers can make maximum use of digital payment options to avoid these changes and take care of free transaction limit.
Disclaimer
This article is based on the new rules issued by RBI. Readers are advised to take care of these rules while changing their banking habits so that additional fees can be avoided.
