RBI formed a committee headed by VG Kannan, IBA Chief to review ATM pricing

The Reserve Bank of India (RBI) constituted 6-member committee headed by VG Kannan, Chief Executive of Indian Banks’ Association (IBA) to review ATM pricing. It will review the existing interchange fee and pricing structures to reduce prices for customers on Automated Teller Machines (ATM) transactions with a broader objective to improve rural penetration of teller machines. VG Kannan, IBA Chief to review ATM pricing

Key Points:

  • It will submit its report within two months from the date of its first meeting.
  • The other members of the panel are National Payments Corporation of India (NPCI) Chairman Dilip Asbe, State Bank of India (SBI) banker GK Nair, Director of confederation of ATM industry K Srinivas, Housing Development Finance Corporation (HDFC) banker S Sampath Kumar and Tata Communications and Payment Solutions Chief Executive Officer (CEO) Sanjeev Patel.
  • The panel will review the overall patterns of usage of ATMs by cardholders and assess the impact, if any, on charges and interchange fees. It will assess the entire gamut of costs in respect of the ATM ecosystem and make recommendations on the optimal charge/interchange fee structure and pattern.
  • In order to deal with the increased cost of operating ATMs, banks and white-label ATM operators (WLAOs) want the RBI to raise ATM interchange fee from Rs. 15 to Rs. 18 for cash withdrawals and card-to-card fund transfers, and from Rs. 5 to Rs. 8 for other non-financial transactions.
  • According to RBI guidelines, the savings bank account holders can make 5 free transactions in a calendar month after which they will be charged a particular amount for each transaction that varies from bank to bank.

About Reserve Bank of India:
♦ Headquarters: Mumbai
♦ Governor: Shaktikanta Das
♦ Deputy Governors: BP Kanungo, N S Vishwanathan, Viral Acharya and Mahesh Kumar Jain