ATM Withdrawal Charges Hiked to ₹23 from May 1: RBI

​RBI increases fees charged for cash withdrawal from Automated Teller Machines (ATM) from May 1, 2025. Earlier, one had to pay ₹21 for every transaction; however, now, customers will be charged ₹23 per transaction if they exceed free transactions. This adjustment attempts to dampen the costs of running and providing maintenance and ATM withdrawal services across the country.​

Details of the Revised Fee Structure

Customers of banks can avail themselves of a certain number of free ATM transactions per month as per the revised guidelines.

• Account holders are allowed 5 free transactions per month on Own Bank ATMs comprising both financial and non financial transactions i.e. cash withdrawal and balance inquiries, respectively.
• Other Bank ATMs:

• Customers can carry out three free transactions a month at ATMs of other banks, on the Metro Centers.​
• Non-Metro Centers: Five free transactions per month are permitted within the transactions offered at other bank ATMs.

After these free transaction limits are crossed, every transaction over and above that, the fee is ₹23. The purpose of this increase is to enable banks to have a balance of rising cost of ATM deployment, maintenance and security. ​

Rationale Behind the Fee Hike

A decision to increase ATM transaction fees is caused by the continuously increasing costs for banks to maintain a network of ATMs. Some of those increased costs are due to:

• Logistic: Much effort and expense are involved in ensuring a steady supply of cash and in distributing it to ATMs.​
• In addition, to maintain the operation and security of ATMs, regular servicing, software updates and hardware upgrades are indispensable.​
• The Implementation of Robust Security Protocols: This also contributes significantly to the operational costs specifically to secure against the fraud and cyber threats.​

The RBI adjusts the fee structure to make sure that banks are able to recover these costs and at the same time, so that they are encouraged to continue providing ATM services to as many customers as possible. ​

Impact on Customers

This fee hike could force customers to spend more on their banking operations as customers have to use the ATM frequently to exceed the ATM Withdrawal free transaction limit. In order to minimize the damages, we might advise account holders to try the following:​

1. Plan and withdraw larger amounts less frequently in order to fit within free transaction limits.​
2. Digital Payment Method: Adopt digital banking options, including Unified Payments Interface (UPI), internet banking, and mobile wallets for daily transactions, minimizing the need for cash.
3. Check the ATM Usage: Keep a track of the ATM Withdrawal usage and ensure to not cross the free transaction limit.​

Customers can manage and possibly decrease the extra costs that would be caused by the revised ATM withdrawal fees through adopting these practices.​

Industry Response and Criticism

Different stakeholders heatedly reacted to the fee increase. The move was criticized by the Tamil Nadu Chief Minister M.K. Stalin called it ‘institutionalized extraction’ that could also hamper financial inclusion efforts as it may worsen conditions for financially disadvantaged people, most of whom depend on cash transactions.

But, as opposed to that, several industry experts believe that adjusting the fee is an important step that is taken to keep ATM networks sustainable. Without such measures, they argue that banks could find it difficult to deliver and can even withdrawal ATMs services in rural and semi urban areas where digital infrastructure would not be as robust as otherwise.​

Comparative Perspective

For instance, it’s worth mentioning that globally ATM fees undergo periodic revisions which depend on various factors like inflation, technological development, consumer behavior change, etc. The last revision of the fee in India was made in 2021 when the fee rose from ₹20 to ₹21 per transaction. These efforts to bring service charges closer to the operative reality have seen the current hike to ₹23. 

The Understanding that Stays

The RBI decision to allow banks to hike ATM withdrawal fees reveals the challenge of banks recovering costs without inconveniencing customers. Although this fee hike would represent an extra expense to the consumers (particularly those who often exceed free transaction limits), it also shows how digital payment methods need to be adopted.

Thus as the banking landscape transforms, both institutions as well as customers would have to adjust to such changes in order to advance towards a more sustainable and efficient financial ecosystem.