Banks in India are replenishing their ATMs with cash more often because of a recent rules change enacted by the country’s central bank. 

Last year, the Reserve Bank of India limited how many free transactions cardholders may initiative at other banks’ ATMs to five per month, and the total of those withdrawals may not exceed 10,000 rupees (US$210 or $175 euros) (see story).  It enacted the change after banks requested the cap because they were being forced to pay 18 rupees to the banks whose ATMs their customers were using, even for transactions as small as 100 rupees. 

As a result, banks increased their ATMs’ cash-withdrawal limits so customers could make larger transactions during one ATM visit and not have to go to another bank’s ATMs. This in turn required them to put more cash in their own ATMs, an official from the Mumbai-based State Bank of India tells PaymentsSource. 

“This means that the number of times ATMs are replenished increases as more and more customers will now make large transactions,” the official adds. “Vendors have to make additional trips, which means additional costs.” 

Banks pay vendors that replenish cash and provide security vehicles and personnel at least 500 rupees per day per additional visit to each ATM. This has caused ATM-handling costs to rise, especially for banks with large ATM networks such as State Bank of India, HDFC Bank and Mumbai-based ICICI Bank Ltd., according to the official. 

State Bank of India and Mumbai-based HDFC Bank recently raised their ATM-withdrawal limits by almost 50%. The limits vary from 15,000 rupees to 100,000 rupees a month. Most banks in India set 50,000 rupees as their withdrawal limit for users of regular debit cards. Limits for premium and basic debit cards varied.

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