The Delhi High Court has dismissed a petition challenging the cap on free-of-charge withdrawals by banking customers from own bank ATMs, saying it was a policy decision.
A Bench of Chief Justice Rajendra Menon and Justice V.K. Rao said the ATM facility provided by banks have lot of overhead costs, like salary of guards and power consumption charges. Therefore, it said, there cannot be unlimited free ATM transactions.
The Bench said, “They have to maintain the ATMs and there will be establishment costs.”
It will be “disastrous” if banks close ATMs due to its interference in the issue, it said.
Reserve Bank of India’s new guidelines state that bank customers in six metros — Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengaluru — are allowed to withdraw money free of charge only five times a month from ATMs of their banks and will be charged ₹20 for every subsequent transaction.
Stating that a banking customer can afford ₹20 for every additional transaction in a month, the court dismissed the petition filed by lawyer Swati Aggarwal, seeking directions to allow unlimited free transactions for banking customers at ATMs of their banks.
Ms. Aggarwal claimed that the guidelines were issued at the behest of a few banks and Indian Banks Association, which had approached the RBI seeking changes in extant instructions regarding free transactions at other banks’ ATMs.
It said, “In almost all modern economies of the world, there is no cap on the number of transactions one can make at own bank’s ATMs and unlimited number of transactions remain free of charge on their own bank’s ATMs.” It contended that the RBI decision contradicts its own circular dated March 10, 2008, whereby it had “justified and given directions allowing the free usage of ATMs for unlimited number of transactions on own bank ATMs”.
The plea alleged that levying charges was highly “arbitrary and unjustified” besides being “discriminatory and against good banking practices and reforms and a backward move”.