So far banks in India do not charge us for withdrawing money from their ATM machines. And if we some other bank’s ATM machine, we can withdraw without any fee up to 5 times a month. But now there is a proposal by banks to charge customers separately for withdrawing money from ATM. Here is a news article about the same:
So far no bank has said that it is actually going to charge. We are yet to know if banks are actually going to charge us. I think they should not charge separately because of following reasons:
1. ATM transactions are part of the banking service and ATMs are now integral part of banking system. So banks should not charge separately for withdrawing money from ATMs.
2. If my bank charges me for ATM withdrawals, I will stop using their ATM and will simply go to the nearest branch and withdraw my expected monthly expenses – may be once a month. It will crowd their branch and hence bank employees won’t get time to solicit us to sell some lucrative investment proposals!
3. Situation of more crowded bank branches will need banks to go for more floor space and bigger office space which means more expense; and also need to hire more employees on teller counters. This is against their business model.
4. Net deposit with banks will reduce since people will start withdrawing in higher amounts to avoid multiple withdrawals at ATMs, so banks will lose net deposits.
Therefore I think it is loss making proposal for banks to charge separately for ATM withdrawals and they should not go for it… We already have proposals for no-frills ATMs or unbranded ATMS which will be run not by banks but by third parties for all banks in single ATM; with unique revenue model; I think that is the best way out in the future since it is a win-win model for both banks and the customers.
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