From 1 April 2026, banks in India have introduced revised ATM usage rules at the beginning of the new financial year, impacting free transaction limits, withdrawal charges, and interchange fees. These changes, approved by the Reserve Bank of India, aim to balance customer convenience with rising operational costs of ATM infrastructure while encouraging a gradual shift toward digital payments.
Key Changes in ATM Rules
Changes in Free Transaction Limits
The existing structure largely remains, but with a key modification:
- Own Bank ATMs: 5 free transactions per month
- Other Bank ATMs:
- 3 free transactions in metro cities
- 5 free transactions in non-metro areas
New Change:
- UPI-based ATM withdrawals will now be counted within free transaction limits
- Earlier treated separately, these now form part of total monthly transactions
- Limits may vary depending on bank and account type
Revised Charges After Free Limit
- New charge: ₹23 per transaction (excluding GST)
- Earlier charge: ₹21 per transaction
- Indicates a ₹2 increase per transaction after crossing free limits.
Interchange Fee Revision
Interchange fee is charges paid by one bank to another for ATM usage
- Financial transactions: Increased to ₹19
- Non-financial transactions: Increased to ₹7
Impact on Customers
Increased Withdrawal Costs
- Frequent ATM users will face higher costs. Example: 20 extra transactions to ₹460 + GST, showing cumulative impact
Metro vs Non-Metro Variation
- Metro users: 3 free transactions (other bank ATMs)
- Non-metro users: 5 free transactions
- Reflects differentiated access based on location.
Behavioural Shift
The changes are expected to encourage:
- Reduced ATM visits
- Higher withdrawal per transaction
- Greater adoption of digital payments (UPI, cards, etc.)
Reason Behind Increase
The RBI has allowed banks to revise ATM charges due to:
- Rising maintenance and operational costs
- Need for security upgrades
- Expansion and upkeep of ATM networks
The move aims to ensure sustainable ATM infrastructure while maintaining service quality.