For digital push, Centre mulls reducing free ATM withdrawals to threeIn a bid to disincentivise use of cash and promote digital transactions, Centre is considering a proposal to limit the free withdrawals in ATMs to just three. The proposal, floated by bankers, has been deliberated
In a bid to disincentivise use of cash and promote digital transactions, Centre is considering a proposal to limit the free withdrawals in ATMs to just three.
The proposal, floated by bankers, has been deliberated upon in the pre-budget consultations with the Finance ministry and many see it a s one of the ways to push digital transactions, Economic TImes reported citing people familiar with the matter.
"A proposal to bring down free ATM transactions to three per month has been discussed with the finance ministry, and this is one of the measures being considered to disincentivise use of cash," a senior banker told ET.
"Those free transactions were decided during a different era, but things have changed now and we need to change with that. If only three free transactions are allowed, then people will be inclined to shift to digital transactions," another banker said.
Currently, most banks allow own customers up to five free ATM transactions every month after which a fee of Rs 20 per transaction plus service tax is applied. For non-customers, banks offer three free transactions in top six metros — Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad — and five free transactions in the remaining cities. These rules have been there since Nov 2014.
According to most banks, ATM transactions since November have been sporadic and have fallen anywhere between 10% and 20%. If they drop further, costs will rise making the ATM business unviable.
Just last week, NITI Aayog CEO Amitabh Kant had said that cards, ATMs and PoS machines would become redundant in the country by 2020. " ... by 2020, my view is that in the next two-anda-half years, India will make all its debit cards, credit cards, all ATM machines, all POS machines totally irrelevant," Kant had said. "India will make this jump because every Indian will be doing his transaction just by using his thumb in thirty seconds...."