ATM Withdrawal Charges to Increase to Rs 23 from May 1: RBI’s New Fee Structure Explained

The Reserve Bank of India (RBI) has increased the fee for ATM withdrawals, a move that will affect millions of bank customers across the country. Starting May 1, 2025, customers will have to pay Rs 23 per ATM transaction once they exceed their monthly free withdrawal limit. This marks a Rs 2 increase from the current Rs 21 per transaction, last revised in 2021.

New ATM Withdrawal Charges: What’s Changing?

While the fee hike applies to transactions beyond the free limit, customers will continue to enjoy a set number of free ATM withdrawals every month as per RBI guidelines.

ATM Free Transaction Limits (As Per RBI Guidelines)

• At own bank ATMs: 5 free transactions per month (includes both financial and non-financial transactions).

• At other bank ATMs (Metro cities): 3 free transactions per month.

• At other bank ATMs (Non-metro areas): 5 free transactions per month.

Once these limits are exhausted, every additional withdrawal will be charged at Rs 23 per transaction.

Why Has RBI Increased ATM Fees?

The Reserve Bank of India (RBI) has justified the fee hike, citing rising operational costs associated with maintaining ATMs across the country. The last revision in ATM charges was made in 2021, when the fee was raised from Rs 20 to Rs 21 per transaction.

Key Reasons for the ATM Fee Hike:

1. Higher ATM Maintenance Costs: Banks incur significant expenses in cash management, ATM upkeep, software upgrades, and security.

2. Increased Operational Expenses: With inflation and higher logistics costs, banks face challenges in sustaining ATM services.

3. Encouraging Digital Transactions: The RBI has been promoting digital banking solutions like UPI, mobile banking, and internet banking to reduce cash dependency.

Impact of the ATM Fee Hike on Customers

This change will primarily affect frequent ATM users, who may now need to plan their cash withdrawals more strategically to avoid additional charges.

• Frequent Withdrawals Will Become Costly: Those who rely heavily on ATMs for cash transactions will need to limit their withdrawals or use digital banking alternatives.

• Banks May Push for Digital Payments: Many banks actively encourage customers to use UPI, mobile wallets, and online banking to reduce ATM dependency.

• Public Sector Banks Under Financial Pressure: Several public sector banks (PSBs) have been struggling to manage ATM operational costs, while the State Bank of India (SBI) reportedly earns a significant revenue from ATM withdrawal charges.

How to Avoid Extra ATM Charges?

To minimize additional ATM fees, customers can take proactive steps such as:

1. Use Free Transactions Wisely

• Plan monthly withdrawals to stay within the free transaction limit set by the RBI.

• Withdraw higher amounts at once instead of multiple smaller transactions.

2. Opt for Digital Banking Solutions

• Use UPI payments, internet banking, and mobile wallets for routine transactions.

• Link your bank account with payment apps like Google Pay, PhonePe, or Paytm to reduce cash dependency.

3. Check Bank-Specific Offers

• Some banks provide higher free withdrawal limits for premium account holders or salary accounts.

• Consider upgrading to privileged banking services if your withdrawals exceed the free limit regularly.

Conclusion: What Lies Ahead?

With the new ATM withdrawal fee of Rs 23 per transaction coming into effect from May 1, 2025, bank customers will need to rethink their cash withdrawal habits. The move is intended to help banks cover increasing ATM operational costs, while also encouraging a shift towards digital transactions.

For those who frequently rely on ATMs, planning withdrawals wisely and exploring digital banking options can help avoid unnecessary charges.