MUMBAI: Account holders may end up paying the price of additional security at ATMs in the form of fewer free transactions. The Indian Banks Association (IBA) has proposed that the mandatory five free transactions that banks are required to allow in a month include even the ones at the ATMs of an account-holder's bank.

The proposal comes in the wake of higher charges that banks foresee as they have been directed to provide guards at every ATM and also have electronic surveillance in the form of CCTVs. The instructions have come from state governments in the wake of a brutal attack at an unguarded ATM kiosk in Bangalore last year.

IBA has also supported an increase in charges that banks pay each other when their customers use third-party ATMs from Rs 15 to Rs 18. At present, most banks do not charge account holders if they use the bank's own ATMs. In addition, RBI norms require every bank to allow its customers access to third-party ATMs five times a month without any charge, subject to a maximum withdrawal of Rs 10,000. Some banks provide their customers more than the mandated number of free transactions but this varies from bank to bank.

Addressing reporters, IBA chief executive M V Tanksale said that the increase will not affect most account holders since it allows more than one transaction per week. "For balance enquiry, SMS is a much more convenient option," said Tanksale, adding that reducing the number of free transactions would ensure there is no overutilization of the ATM network.

According to Tanksale, the ATM network of banks is currently around 1.4 lakh and is expected to increase to around 2 lakh in six months. "The viability of this network depends on the migration of transactions from branches to ATMs," said Tanksale. He added that given the size of the network, any increase in costs would translate into an annual increase in cost of thousands of crores.

With ATM networks seeing explosive growth, the RBI has been taking measures to ensure that all constituents are covered. The central bank has said that a percentage of all new installations should be disabled friendly. "IBA has designed a logo to highlight ATMs that are accessible to the visually challenged. This way the public can direct the visually challenged to ATMs that they can use," said Tanksale.

The other problem is that with the sudden spike in installations in the last one year, the average transactions has dropped sharply. With the government proposing to transfer subsidies and other benefits directly to individual accounts, banks are expecting a surge in transactions.

In the early days of shared payment network, banks charged anywhere between Rs 20 to Rs 60 for use of third-party ATMs. Four years ago, RBI directed banks to waive all charges, but later relented and allowed banks to charge beyond five transactions a month.

