The Centre is considering reducing the number of free withdrawals at ATMs to just three, including from those of banks where they have accounts. “A proposal to bring down free ATM transactions to three per month has been discussed with the Finance Ministry,” a senior banker told The Economic Times, adding that this was part of measures being mooted to move towards a cashless economy.
Currently, customers can make five free transactions a month at ATMs of home banks, after which they are charges Rs 20 per withdrawal plus service tax. Non-customer banks offer three free ATM withdrawals in the six metros and five in other cities, after which an interchange fee of Rs 15 to Rs 20 is charged. This is the amount a customer’s bank pays to the one that maintains the ATM from which a withdrawal is made.
Bankers made the proposal during pre-Budget discussions with the Finance Ministry. They believe this will push citizens to opt for digital transactions instead of making cash payments, the report added. “If only three free transactions are allowed, then people will be inclined to shift to digital transactions,” a private banker told The Economic Times, adding that free transactions were allowed “during a different era”.
News of this proposal comes a week after the CEO of Niti Aayog, or the National Institute of Transforming India, Amitabh Kant, said plastic money, ATMs and Point-of-Sale machines will be redundant in India by 2020. “The cards will become redundant in India as every Indian will do transaction just by using his thumb and mobile phones,” he had said.
The government has been pushing citizens to opt for digital transactions over cash payments since it demonetised Rs 500 and Rs 1,000 notes, saying it was to fight counterfeiting, black money and corruption. Prime Minister Narendra Modi had also introduced Bharat Interface for Money, an Aadhar card-based app, to enable citizens to make payments online.