The Reserve Bank of India (RBI) will consider reducing the number of free ATM withdrawals, as recommended by Indian Banks’ Association, in an effort to cut down on cash transactions in the economy.
“We will examine that (IBA recommendation of cutting down number of free ATM transaction to 5 per month). Many other proposals have come,” RBI Deputy Governor H R Khan told PTI.
“The whole idea is that people are using too much of cash and adding to the costs. We will examine all those issue,” he said.
The apex bank has been taking measures to cut down on cash transaction in the economy in a bid to minimise the risk of money laundering in the system.
IBA recently recommended a change to include all the ATM transactions, including the own-bank ones, to 5 per month in view of rise in costs due to additional security measures being put in place following the Bangalore incident wherein a person was brutally attacked at the ATM.
Following the incident – where a woman employee of Corporation Bank was attacked by an intruder with a machete in November – security arrangements of 1.40 lakh ATMs of banks were reviewed leading to additional costs for manning ATMs.
IBA has suggested the RBI to maintain the current practice of making an account holder pay Rs. 20 per transaction for the ones beyond the limit it has proposed.
At present, holders of savings accounts enjoy five free transactions per month at the ATMs of banks other than their own, while there is no such limit for use of own-bank ATMs.
The RBI needs to come out with specific guidelines in this regard, Mr Sinha said.
According to IBA estimates, securing every ATM with an armed guard and installing CCTV camera will increase the cost roughly by Rs. 40,000 per ATM.
Banks have also been asked to install Aadhaar-card enabled ATMs, which would again involve more costs.