The Reserve Bank of India (RBI) has announced an increase in ATM withdrawal fees, raising the charge from ₹21 to ₹23 per transaction after customers exhaust their free monthly limit. The revised fee structure will take effect from May 1, 2025.
Despite the fee hike, customers will continue to benefit from a limited number of free ATM transactions each month. As per RBI guidelines:
- Account holders will receive five free transactions per month at their own bank’s ATMs (including financial and non-financial transactions).
- In metro cities, customers can avail three free transactions per month at ATMs of other banks.
- In non-metro areas, the limit is five free transactions per month at other banks’ ATMs.
Once these limits are exceeded, customers will be charged ₹23 per withdrawal.
Reason for the Fee Hike
The RBI has cited rising operational costs as the primary reason for the increase. The last revision in ATM withdrawal charges was in 2021 when fees were raised from ₹20 to ₹21 per transaction.
Banks incur significant expenses for cash management, ATM maintenance, and security. The fee hike aims to help banks recover some of these costs while encouraging customers to adopt digital payment solutions such as UPI, mobile wallets, and internet banking.
Government data indicates that State Bank of India (SBI) earns a considerable amount from ATM withdrawal charges, while public sector banks (PSBs) continue to face financial strain due to the high costs associated with ATM services.
Frequent ATM users may need to strategize their withdrawals to avoid extra charges, while digital transactions remain a cost-effective alternative.
