The Reserve Bank of India (RBI) has announced an increase in ATM transaction charges, allowing banks to levy a fee of ₹23 per transaction beyond the stipulated free monthly limit. The revised charges will come into effect from May 1, 2025, marking the first hike in over three years. This decision follows the RBI’s approval to raise the ATM interchange fee to ₹19 for cash withdrawals and ₹7 for non-financial transactions, aimed at improving profitability for ATM operators.
Under the new guidelines, customers will continue to enjoy five free transactions per month at their own bank’s ATMs, inclusive of financial (cash withdrawal) and non-financial transactions (such as balance inquiries). Additionally, they are entitled to limited free transactions at other banks’ ATMs—three in metro cities and five in non-metro locations. Beyond these limits, banks can charge up to ₹23 per transaction, excluding applicable taxes.
The interchange fee, which is the amount paid by one bank to another for offering ATM services, will now be determined by ATM networks instead of being fixed by the RBI. This shift provides greater flexibility to operators while ensuring service sustainability.
The decision comes after a proposal from the ATM Operators’ Association to increase fees, citing challenges in maintaining profitability amid rising operational costs. As of February 2025, India has approximately 258,000 ATMs and cash recycler machines catering to millions of users across the country. The National Payments Corporation of India (NPCI), which oversees the National Financial Switch (NFS), had earlier recommended raising interchange fees for domestic financial and non-financial transactions by ₹2.
This move aligns with broader efforts to ensure the financial viability of ATM services as demand for cash withdrawals remains steady despite the increasing adoption of digital payment platforms.
While the increase may lead to higher costs for frequent ATM users exceeding their free transaction limits, it is unlikely to affect most customers who manage their withdrawals within the stipulated limits. The RBI has emphasized that these changes are necessary for maintaining uninterrupted access to cash across urban and rural areas.
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The revision in ATM withdrawal fees reflects the RBI‘s attempt to strike a balance between operational sustainability for banks and convenience for customers. As banks implement these changes starting May 1, customers are advised to plan their monthly transactions wisely to avoid additional charges. This policy update highlights the evolving dynamics of India’s financial ecosystem as it adapts to both technological advancements and economic realities.
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