MUMBAI: ICICI Bank , the largest private lender with the second largest ATM network in the country, has announced a cap in the number of free ATM transactions for most of its saving account holders from January 1 next year.

The cap on transactions will apply to regular savings accounts, but premium accountholders holding large balances will be exempt from it. From next month, accountholders can undertake only five free transactions on the bank's ATMs, while free transactions on other bank's ATMs have been reduced to three from five.

Earlier, there was no cap on withdrawals made through ICICI-owned ATMs.

Beyond free transactions, customers will be charged Rs 20 for cash withdrawals and Rs 8.50 for non-cash transactions. The move is expected to slow the use of ATMs, following a 9% drop in volumes last month. The new rule will apply only to customers in six metro areas - Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.

In case of usage in non-metro areas, a customer can enjoy five free transactions per month at non-ICICI Bank ATMs, after which the same charges apply, the bank said. The move by ICICI Bank comes on the back of other large issuers State Bank of India, HDFC Bank and ICICI Bank imposing similar restrictions on their customers.

Banks are, meanwhile, encouraging customers to use electronic payments which will reduce their cash handling. The RBI has encouraged banks to onboard accountholders into the mobile banking platform as this will reduce dependency on ATMs for non-cash transactions. The setting up of the Bharat Bill Payments System is also expected to bring down the dependency on cash for utility bill payments after the institution becomes operational in 18 months.

