RBI waives inter-bank ATM transaction fee

Dec 06: Giving a huge relief to ATM banking customers, Institute for Development and Research in Banking Technology (IDRBT), a subsidiary of the Reserve Bank of India has decided to relinquish the Rs.2-per-transaction fee that were being charged over banks for switching its transactions, official said in a written statement on its website. The facility has begun from December 03, 2007.

The waiving off in fee will directly help customers as most of the banks will now charge only mutual interchange transaction charges. It may also be held that some banks can also cut off the entire fee levied on the transaction charges while accessing to other bank’s ATM for raising their customers as IDRBT hopes.

For encouraging the customers, IDRBT, the technical arm of RBI has waived off the RBI’s transactional charges from banks for ATM interchange on Wednesday and this rule has been in effect from Monday, as per IDRBT said in a statement. “The switch can also act as an aggregator of transactions for the bank”, said IDRBT as it hopes to cut off transactional fee because now banks would not ask to the customers for RBI’s transactional charges as per ATM interchange, when they use ATM for any sort of transaction.

IDRBT had set up Nationwide Financial Switch (NFS) network in 2004 through out the country to provide banks an option for other payment shared networks that covers 16,891 ATMs of 27 member banks of NFS. NFS covers major banks include ICICI Bank, HDFC Bank, Axis Bank, Canara Bank, Corporation Bank, Bank of Baroda, Punjab National Bank and many more but exclude State Bank of India and its subsidiaries, which have the largest network of Banking branches and ATMs.

All the banks have welcomed this move, while some of them have expressed joy for waiving off transactional fee. They hope that this surplus fund can be used for advertising and educating the customers about using alternate banking methods in a safe manner.

Implementing this rule, IDRBT hopes, “ATMs can be used as ‘shared infrastructure of all banks’” that will enhance customers to use ATM facilities more frequently without reducing the weight of their pockets. Nowadays customers prefer to use ATMs for several sorts of transaction with approximately 70 percent of overall banking transaction and this step of IDRBT may hike the figure to close to 90 percent transactions, as it hopes.

RBI had set up IDRBT for solving the technical problems of RBI in 1996 at Hyderabad, while NFS has been set up to control all the inter-ATM transactional switches which is India’s biggest transactional network that is a witness of around an average of 75,000 transaction per day across the country as per statistics report of IDRBT.