ICICI Bank to hike ATM charges from January 1

Mumbai: Country's largest private sector lender ICICI Bank has announced a hike in its ATM charges for  saving account holders from January 1 next year.  Under the new method, the number of free transactions in a month is fixed at five using own ATMs, while it has been  capped at three for other banks' machines.  Customers can enjoy only five free transactions,including financial and non-financial, at the bank's own  automated teller machines (ATM), it said in a post on its  website. 

After exceeding the free transaction limits, customers  will have to pay Rs 20 per financial transaction excluding  service tax and Rs 8.50 for every non-financial transaction,  it said.  For transactions at non-ICICI Bank ATMs, the number of  free financial and non-financial transactions have been  reduced to three per month at six metros of Mumbai, New Delhi,  Chennai, Kolkata, Bengaluru and Hyderabad, after which the  customer will have to pay Rs 20 for a financial transaction  and Rs 8.50 per non-financial transaction.  In case of usage in non-metro areas, a customer can enjoy five free transactions per month at non-ICICI Bank ATMs, after  which the same charges apply, it said. 

The issue of ATM usage has been a very contentious one  due to the inter-connect charges a bank has to pay to the  other. Additionally, the operating costs have also gone up,  following a spate of incidents at the ATMs like the robbery at  Bengaluru last year, which started the debate on transaction  charges. After consultations, the RBI last month started a system  under which it allowed banks to charge from the fourth  transaction onwards at other banks' ATMs in metros, and also  gave the liberty to banks to charge customers for the sixth  transaction onwards at own machines.  "The ATM transaction is free to you but not free to the  bank. It costs the bank Rs 75 to Rs 100 for those five  transactions.

The bank has to collect that amount from  somewhere and it has to be from customers. But there are two  distortions that it creates. First, not everybody is doing the  same amount of transactions and (also) are we subsidising  using of cash by freeing up ATMs ?," RBI Governor Raghuram  Rajan had said, in defence of the new move.  Many banks have already announced reviews in their ATM  charges following the announcement.