Attention ATM users! SBI, Bank of Baroda restrict cash withdrawals from micro-ATMs of other banks

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Bank ATM users alert: Bank of Baroda (BoB) and State Bank of India (SBI) have put cash withdrawal limitations for customers at micro-ATM terminals of other banks, in a move that would majorly impact banking services in rural areas.

According to Economic Times reports, under new rules, BoB has limited its withdrawals for customers from micro-ATM terminals of other banks to four while SBI has limited it to just one.

Meanwhile, the report further states that SBI account holders who are not part of the government’s direct benefit transfer scheme are allowed to do five transactions a month. 

These limits only apply in case the customer uses the micro-ATM terminal of another bank. The withdrawals have been limited to stop middlemen meddling with the commission money.

“As per NPCI advisory, BoB has fixed issuer side limit of four transactions per month by a customer. This has been implemented to protect the interest of financial inclusion customers, the reason behind the move is acquirer banks’ agents indulging in split transactions and as per advisory from NPCI,” said a BoB spokesperson.

Most of the time in rural areas, shopkeepers and agents visit the banks or ATMs to withdraw the money on behalf of the beneficiaries of direct benefit transfer scheme. As they get commissions on multiple transactions, they do not withdraw a large amount, instead, they repeatedly withdraw it in small sums to claim commission.

“We found that many of our customers were splitting one big cash-out into multiple small ones,” a senior banker told Economic Times. “While the customer does not get any benefit through such acts, retailers make extra money since their commissions are based on the number of transactions.”

As per the norms, BoB pays 0.5% of the transaction amount, or Rs 15, whichever is lower, when a customer uses a micro-ATM of any other bank. Retailers or agents get a share of this amount.

To stop this practice, the banks have now limited the transactions of BoB and SBI.

This rule does not apply to those who not under the direct benefit transfer scheme. The free limit at other banks' ATMs are three transactions in metro cities and 5 transactions in other cities and towns.

The new rules also state that SBI will allow 8-10 free ATM transactions in a month for its customers with average monthly balance (AMB) of up to Rs 25,000 in their savings accounts. For those with AMB above Rs 25,000, the bank will provide unlimited transactions at SBI ATMs.