As per the advice / directions of Indian Banks’ Association (IBA), five free cash transactions per month will be allowed in other bank ATMs for savings bank customers w.e.f. 15th Oct 2009. Also, the maximum withdrawal limit per transaction is Rs. 10,000/-.

August 21, 2009. Banks will again start service charges on inter-bank ATM transactions just a few months after making all inter-bank ATM transactions free of service charges. You will incur these service charges if you make more than 5 inter-bank ATM transactions in a month.

Inter-bank transactions are those in which you make a ATM transaction on a ATM that’s not owned by the bank that issued the ATM card. Inter-bank ATMs are also referred to as third-party ATMs. ATM transactions on a ATM that’s owned by the bank issuing the ATM card will remain free.

All the banks had made inter-bank ATM transactions free in April of this year pursuant to RBI directives.

However according to the Indian Banks Association, the banks have made a proposal to RBI to limit the number of free inter-bank ATM transactions to 5 and RBI has agree to this proposal.

Banks will start levying you these service charges from October of this year. There will be a service charge of Rs. 20 per transaction according to the IBA.

India Today also reports that RBI has put a cap of Rs. 10000 per transaction on transactions involving inter-bank ATMs.

It’s not clear if all the banks will start levying these service charges or only some banks will do so.

One reason for the re-introduction of these service charges could be that banks want to limit the number of transactions which could have risen as a result of making the transactions free in April.

What do you think of banks levying service charges on inter-bank ATM transactions?