Withdrawals from ATMs beyond the free transaction limit will cost more from 1 January.

The Reserve Bank of India (RBI) has from the New Year allowed banks to hike the charges on cash and non-cash ATM withdrawals once the free monthly limit is exhausted.

As per the RBI notification, customers will have to pay Rs 1 more than what they were paying earlier to withdraw money from the ATM. They will have to pay Rs 21 per transaction, instead of Rs 20. There is also a tax under the goods and services tax (GST) regime.

The customers are allowed five free transactions per month, cash or non-cash, if they are withdrawing from their own bank ATMs. They will be able to avail three free transactions from ATMs of other banks in metro cities and five in case of non-metro cities. These charges come into play once the customers exceed their free transaction limit.

“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022,” the RBI had said in a circular.

RBI said the new rule will also be applicable on Cash Recycler Machines.

The structure of interchange fees was last revised in August 2012. The revision in customer charges, on the other hand, was last made in August 2014.

Banks have been notifying their customers about the new charges to be imposed from 1 January.