New Banking ATM usage Rules

Over the last couple of years, the way you carry out your banking transactions has changed a lot, particularly via the new-age, technology-enabled platforms. Be it making payments online, swiping your cards at shopping outlets or withdrawing cash from ATMs (automated teller machines) – all routine transactions have become more user-friendly and secure, if not foolproof. This is thanks largely to the Reserve Bank of India's regulations to strengthen the safety infrastructure for such transactions and the steps taken by banks to encourage the use of such alternative channels instead of bank branches.

Banks are keen that ATMs are seen as more than just cash-dispensing machines. A considerable number of regulatory interventions aimed at bolstering the new-age payment framework has pertained to ATMs. Consequently, the usage of ATMs is reported to have gone up. "Post the changes in the regulation on ATM usage, we have seen an approximate four-fold increase in non-Standard Chartered customers accessing our ATMs," says Rajashree Nambiar, general manager, distribution, Standard Chartered Bank.

Concurs Shalini Mehta, executive vice-president, Kotak Mahindra Bank: "ATM usage has certainly gone up. The total transactions have increased by 106% since April 2009. Customers have adapted to ATMs as one of the most preferred channels for basic banking transactions." To make the most of this conducive environment, however, you need to be well-acquainted with all the regulations, especially the ones introduced in the recent months, governing ATM transactions.

LIMITING FREE TRANSACTIONS

First, the most recent stricture from the banking regulator – and the one that may not bring cheer to those who used their cards at ATMs of various banks indiscriminately even for nonfinancial transactions – concerns transactions at third-party ATMs. From October 2009 till June 30, card holders were allowed to carry out five free transactions per month, subject to certain limits, at third-party ATMs. However, there was no limit on non-financial transactions like balance enquiry and mini-statement.

But, effective from July 1, the free transactions will be inclusive of even non-financial operations. Any user exceeding the cap of five free transactions will be charged even for balance enquiries, mini-statements, et al. HDFC Bank, for instance, charges Rs 20 per transaction for cash withdrawal and Rs 8.50 for non-financial transactions from accountholders exceeding the free usage limit at third-party ATMs. "For savings account holders maintaining an average balance of Rs 10,000 or more, all third-party ATM transactions are free. For others, we charge Rs 20 per incremental cash withdrawal and Rs 10 for non-financial transaction after they have used their five free services per month.

But, for certain types of accounts (premium) the charges are waived off," says Sumant Kathpalia, head, consumer banking, IndusInd Bank. But, not all banks have such a differential charge structures and could levy the same charges for all kinds of transactions.

ALERTS FOR ALL TRANSACTIONS

Also effective from July 1 is another customer-friendly measure that could minimise the damage caused by misuse of lost or stolen cards. Now, banks have been asked to send SMS alerts to their customers for all transactions carried out using the card – be it online, at merchant establishments or at ATMs. Prior to this, banks sent alerts only if the value of transactions exceeded a certain limit, usually Rs 5,000. With this facility being extended to all transactions, you will be in a better position to take immediate remedial measure, that is block the lost/stolen card in case of a fraudulent transaction executed without your knowledge or consent.

COMPENSATION STRUCTURE

There have been many complaints of a card holder's account being debited despite the ATM not dispensing cash. Likewise, it is also not rare to see some banks drag-ging their feet over rectifying the erroneous debit. Therefore, the RBI has directed banks to resolve such issues in seven working days of a complaint being made, failing which the banks will have to pay a compensation of Rs 100 for each day of delay beyond the seven stipulated days. Before July 1, banks were given 12 days to correct wrong debits caused by ATM problems. However, do note that to be eligible for the compensation, you need to make the complaint within 30 days of the failed transaction.

PIN FOR ALL ATM TRANSACTIONS

From January 1, the RBI has mandated that users will have to enter their PIN for every transaction at ATMs. Earlier, you could carry out several transactions by entering the PIN just once. This effectively rules out the possibility of anyone withdrawing cash from your account in case you forgot your debit card at the ATM.

FREEING UP OF THIRD-PARTY ATMS

A regulatory change that played a key role in the explosion of ATM transactions in the country, it was implemented first in April 2009. The diktat permitted users to access all ATMs – even the ones not owned by the banks where they maintained accounts – at no cost. While very few are ignorant of this liberty they are allowed to exercise, not many have grasped the nitty-gritty.

In October 2009, however, this flexibility was curtailed to an extent when the RBIacceded to banks' requests to place restrictions on the extent of free usage. Since then, card holders have been allowed to withdraw cash up to Rs 10,000 per transaction at thirdparty ATMs free of charge. Also, free transactions at third-party ATMs have been limited to just five a month. Users carrying out more than five transactions a month will have to shell out a fee, usually about Rs 20 per transaction. As mentioned earlier, from July 1, non-financial transactions, too, will be included in this cap of five free transactions.

NOT JUST 'ANY TIME MONEY'

Banks, in an attempt to reduce the number of customers visiting branches, have enabled several services that can be availed of at ATM kiosks and, of course, bank websites. These services are not mandated by RBI regulations hence are not quick-impact ones. But such efforts by banks have also helped in shedding the perception that the sole function of ATMs is to dispense cash. Many banks allow users to perform functions like paying utility bills, fund transfers, donations to charities, etc through ATMs. "Our accountholders, for instance, can perform multiple transactions like pre-paid mobile top-up, fund transfer to any Stan-Chart account, request for cheque book or account statement, cash or cheque deposit (at select ATMs), online/mobile banking registration, etc," says Nambiar of StanChart.

Source: Economic Times & www.investmentkit.com

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