RBI Increases ATM Withdrawal Fees; Customers to Pay More from May 1

Mumbai, 28th March 2025: The Reserve Bank of India (RBI) has announced an increase in ATM withdrawal fees, which will come into effect from May 1, 2025. Customers exceeding their monthly free transaction limit will have to pay an additional ₹2 per transaction, as per the latest notification from the central bank.

Revised ATM Charges
Currently, banks charge ₹21 per transaction beyond the free limit. From May 1, this will increase to ₹23 per transaction.
The ATM interchange fee has also been raised by ₹2, taking it from ₹17 to ₹19 per transaction.
Charges for non-financial transactions, such as balance inquiries, will also increase from ₹6 to ₹7 per transaction.

Free ATM Transaction Limits
Customers are allowed a limited number of free transactions each month:
Metro cities: 5 free transactions per month.
Non-metro cities: 3 free transactions per month.
Once this limit is exceeded, the increased charges will apply.

What is the ATM Interchange Fee?
The ATM interchange fee is the amount one bank pays another for providing ATM services to its customers. This cost is usually passed on to customers through transaction fees.

Reason Behind the Fee Hike
The RBI’s decision to revise these charges follows requests from white-label ATM operators, who argued that rising operational costs were impacting their business. The increase in ATM fees will apply nationwide, affecting customers of smaller banks that rely on larger financial institutions for ATM infrastructure.

Impact of Digital Payments on ATMs
India’s shift towards digital transactions has reduced the dependency on ATMs.
In FY14, digital transactions in India stood at ₹952 lakh crore.
By FY23, this figure had surged to ₹3,658 lakh crore, highlighting the rapid adoption of UPI and online wallets over cash withdrawals.
With digital payments becoming the norm, ATMs are witnessing a decline in usage, leading to increased fees to sustain their operations.