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ATM fees get costlier

May 09, 2006 11:17 IST

Customers can no longer hope to pay just a small fee for ATM usage. The Reserve Bank-promoted National Financial Switch has given in to demand from large banks for a withdrawal of the 50 per cent reduction in transaction charges.

The NFS, which is managed by RBI's Institute for Development and Research in Banking Technology, has restored the charge per transaction for ATM use to Rs 18 from Rs 9.

NFS had reduced the transaction charge in October 2005, which led to ICICI Bank withdrawing some of its heavily-used ATMs in Mumbai from the NFS platform. It subsequently included the withdrawn ATMs back into the NFS platform following negotiations.

State Bank of India had delayed its participation in the NFS, as a result of the cut in transaction charge. SBI had found that the charge of Rs 9 per transaction was considerably lower than the bank's Rs 15-16 operating cost per transaction at ATMs.

SBI officials said: "If SBI had joined NFS with Rs 9 as per transaction charge, it would have meant the bank has to absorb a part of the cost."

"It is worthwhile to have a shared network than just expand individual bank's ATM network. SBI sorted out some issues [with NFS] and will now join the network," said Syed Shahabuddin, chief general manager (IT), SBI.

SBI has the largest ATM network with 5,700 ATMs and ICICI Bank has the second largest network of 2,200 ATMs across the country. The participation of SBI will make NFS a network of 12,000 ATMs.

Use of another bank's ATM will required the customer to pay inter-change charge of Rs 18 plus a switch fee of Rs 2 per transaction.

Daily average transactions on the NFS network are around 17,000. Currently, 19 banks are members of NFS. SBI's participation will take the number up to 20.

Even after joining NFS, SBI would continue to expand its ATM network. SBI group plans to add 2,500 ATMs in 2006-07. SBI has already invested about Rs 900 crore (Rs 9 billion) for its ATM network.

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Abhijit Lele in Mumbai
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