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Last Updated : Jan 02, 2018 02:39 PM IST | Source: Moneycontrol.com

ATM operators demand increase in inter-bank charges for transactions

The demand for a hike in the rate is being led by private sector banks, while some large public sector lenders are opposed to it because any upward revision in the rate would end up inflating their costs.

Automated teller machine (ATM) operators, especially those of private banks, have demanded a raise in inter-bank charges for ATM transactions, according to a report by Business Standard.

The reasons cited for the demand were the impact of demonetization, an increase in the cost of operating the channel, and fewer cash withdrawals by users. If it is heeded, using ATMs is likely to become a costlier affair for the common man.

The operators' demand is being represented by National Payments Corporation of India (NPCI), after the state-owned payments company held separate meetings with private and public sector banks.

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The demand for a hike in the rate is being led by private sector banks, while some large public sector lenders are opposed to it because any upward revision in the rate would end up inflating their costs.

The inter-bank fee is one that is charged by a bank for the use of its ATMs by clients of another bank. The fee is payable by the bank in which the client has an account.

Typically, banks that have fewer ATMs are adversely affected by any upward revision in this rate because its customers would likely be using ATMs of other banks for most of their cash needs, thereby increasing the amount it would have to pay to other operators.

If a part of this cost was to be passed on to customers instead of the bank bearing it at its end, it could result in a change in the number of free transactions they are allowed to make in a month at ATMs of their own banks or even other banks.

A banker from one of the large public sector banks opposing this increase in inter-bank fee told the news daily that the fee was already high and any increase from its current level would mean a loss for the banks in question.

The banker added that once these banks have ascertained the cost, they would discuss it with all stakeholders and fix the rate. He added that private sector banks enjoy an advantage of location when it comes to ATMs because they started putting them up before public sector banks.

However, the banker also acknowledged that security charges and the re-calibration of machines following the roll out of new currency notes had ended up inflating costs for all banks.

India Union Budget 2019: What does Finance Minister Nirmala Sitharaman have up her sleeve? Click here for top and latest Budget news, views and analyses.
First Published on Jan 2, 2018 01:16 pm
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