The Reserve Bank of India (RBI) has recently announced a change in the rules for withdrawing money from ATMs. This change will be applicable from 1 May 2025 and it will affect customers who cross their monthly free transactions limit. Under this new rule, the fee has been increased to ₹ 23 per transaction on withdrawing money from ATMs, which was earlier ₹ 21.
The main objective of this change is to help banks to meet the maintenance of ATM networks and the increasing cost of cash management. However, this step can prove to be expensive for customers who repeatedly withdraw cash. Let us understand this new charge system in detail.
RBI’s new charge system: Key things
To understand the new charge system implemented by RBI, take a look at the table below:
| aspect | Description |
| Effective date | 1 May 2025 |
| First fee | ₹ 21 per transaction |
| New fee | ₹ 23 per transaction |
| Free transaction limit (monthly) | – Your Bank ATM: 5 Transactions- Other Bank ATMs: 3 in metro cities and 5 in non-Metro |
| Interchange fee | Financial Transaction: ₹ 19 non-financial transactions: ₹ 7 |
| Applied area | All ATMs and Cash Recyclers Machines (Except Cash Deposit) |
| Major reason | ATM maintenance and operational costs |
What is the new charge system?
RBI has allowed banks that they can charge a maximum of ₹ 23 per transaction fee from customers crossing monthly free transactions. This fee will apply to both financial and non-financial types of transactions.
Free transaction limit
Customers are provided with limited number of free ATM transactions every month:
- At the ATM of your bank: 5 free transactions (both financial and non-objects are included).
- At the ATM of other banks:
- In metro cities: 3 free transactions.
- In non-Metro cities: 5 free transactions.
Determination of duty
After crossing the free border:
- A fee of ₹ 23 on each financial transaction.
- A fee of ₹ 7 on each non-financial transaction (eg balance check).
Impact on customers
This new charge system will directly affect the customers who withdraw cash repeatedly or finish their free limits quickly.
major impact
- Additional expenditure: Customers who cross monthly free border will have to pay ₹ 2 more on every additional transaction.
- Trend towards digital payment: Increasing cost of cash extract will promote digital payments such as UPI, mobile banking, and internet banking.
- Effects on small banks: small banks, which depend on the ATM network of large banks, may be more affected by this change.
Digital Payment vs. Cash withdrawal
The RBI and the government are constantly promoting digital payments. Let us see how digital payments can be more beneficial than cash withdrawal:
| aspect | Digital payment | Cash withdrawal |
| Cost | Usually free or minimum fee | ₹ 23 per transaction on crossing monthly border |
| Facility | Anywhere, anytime | Access to ATM required |
| Security | Safe and trackable | Cash theft or lose risk |
| Time saving | Immediate transaction | Time to go to ATM |
How to avoid extra fees?
Customers can avoid additional charges from some easy ways:
- Use your bank’s ATM so that free transactions can take full advantage of the limit.
- Monitor your monthly ATM use and not withdraw more cash.
- Adopt digital payments such as UPI, mobile wallet, and internet banking.
- Withdraw the large amount at one time so that there is no need to do transactions repeatedly.
Why did RBI increase the fee?
The RBI has taken this step keeping in mind the increasing operating cost of banks.
- Maintenance, security, and cash management of ATM networks are becoming expensive.
- White-labeled ATM operators also demanded high fees.
This change will help banks to maintain the quality of their services.
conclusion
The new charge system implemented by RBI is a warning to customers to better manage their cash withdrawal behavior. Customers can not only avoid additional expenses by using digital payment options but can also save time and resources.
Disclaimer
This article is based on the rules declared by RBI. The new charge system will only apply to customers who cross their monthly free border. Adoption of digital payment options can prevent additional expenses.
