RBI puts Rs10,000 cap per withdrawal from third party ATMs
August 21, 2009
The Reserve Bank of India, which made third party ATM transactions free from April, has said not more than Rs10,000 can be withdrawn each time they are used and limited the number of such transactions to five a month.
The apex bank has sent a communication in this regard to Indian Banks' Association (IBA) and this is expected to be implemented shortly, IBA chairman K Ramakrishnan said.
"The Reserve Bank has agreed to put a cap of Rs10,000 per withdrawal in such (third party) transactions. Also, the number of such transactions will be limited to five times a month," Ramakrishnan said.
IBA, which is the industry lobby of Indian banks, had submitted its recommendations to the central bank last month citing the financial burden faced by banks on account of huge number of third party usage and small-ticket withdrawals.
Since 1st April, RBI had declared third party ATM usage, including cash withdrawals and account enquiries, free for all customers and said that banks can charge Rs18-Rs20 per month from other banks in case of third party ATM transaction.
Using third-party automated teller machines (ATMs) may be free but withdrawing cash from these machines has not been easy in many parts of the country.
Many customers have had to deal with printouts saying “transaction declined”, however customers using their own banks’ ATMs did not face similar problems. Many a time, the problem is related with the overload on the national financial switch (NFS), which enables inter-bank transactions.
Transactions on a bank’s home ATM network are processed through a different switching system, while inter-bank transactions go to NFS, the country’s largest domestic network for authentication and routing payment details of various e-commerce transactions and e-government activities.
Another problem was, after the RBI orders in April, many banks decided to put on hold their ATM expansion plans, citing lack of revenues. Since, the ATM use was made free; many customers started using other bank's machines to withdraw huge cash, often, which led to problems like, "No Cash" or "ATM Out of order". With the new directive from RBI, let’s hope this will get sorted out. - Yogesh Sapkale[email protected]
.jpg "MoneyLife")
