New Delhi: The Institute for Development and research in Banking Technology (IDRBT) a subsidiary institution of the Reserve Bank of India (RBI) has decided to waive the inter-bank ATM transaction fee. Earlier Rs. 2 were levied by the institution for providing this facility of switching (routing) the transactions of various member banks. Barring some new private banks and foreign banks, IDRBT's fees was passed on to the customer by the most of the banks, thereby making such transaction costlier.
IDRBT has done its part however, it remains to be seen whether the banks are willing enough to pass on this benefit to the customer. One of the major tasks of IDRBT has been the provision of a cheap alternative to other shared payment networks through its National Financial Switch (NFS) network.
NFS network now covers 16,891 ATMs and it is the largest single network in the country covering ATMs of 27 banks. The NFS is an national level switch, with a purpose of integrating all the ATM switches of banks in the country so as to provide the flexibility of making transactions across all connected ATMs. NFS helps the common man to utilize the ATM of any bank rather than restricting the customer to his parent bank.
The objective of this step according to IDRBT to provide an incentive to all banks to join the NFS and widen the existing network of ATMs. Major banks like ICICI Bank, Axis Bank, HDFC Bank, Bank of Baroda and Punjab National Bank etc. are already a part of network. But at the moment NFS doesn't include State Bank of India and its subsidiaries, which have the largest ATM-network in the country. A nationwide switching network can make the entire network of ATMs a shared infrastructure of all banks.
Every section of the banking industry has welcomed this step by the IDRBT. Aspy Engineer VP alternate channels, Axis Bank said, "It’s a good move by the authority, if the benefits of the waiver are passed on to customers. However, if the fund created by this fee could have been used for promotion of customer awareness on safety and education of alternate banking methods, it would have really helped."