On The Way Of Playing On The Same Level Article

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On The Way Of Playing On The Same Level

According to the recent diktat of RBI the cooperative bank customers can now avail the ATM facility. RBI has also ordered to reduce the cost of third party ATM use.

Author: Addi Vardhaman

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For years, cooperative banks have been the poor cousins of Indian mainstream banking. But now, with RBI making access to third-party ATMs free to customers of cooperative banks as well, the playing field may have been a bit more leveled the ground.

Recently, RBI issued a circular extending to cooperative banks, the same free access to ATM directive that it issued to commercial banks earlier . Now, customers of Indian cooperative banks, too, can access their bank statement free of charge from third-party banks from April 1, 2008. A year later, they will be able to withdraw cash from ATMs across the country without incurring any transaction cost.

Large cooperative banks such as Saraswat Cooperative Bank and Cosmos Cooperative Bank are already members of shared payment network BANCs, which provides their customers access to thousands of ATMs across India. Osmos Cooperative feels that the directive of the apex bank will remove inhibitions among customers from using third-party ATMs. “It has been a one-way street so far, as customers of other banks have also been using our ATMs,” says Cosmos Cooperative chairman ML Abhyankar.

A large number of cooperative banks that are a part of the National Financial Switch — promoted by an RBI arm. However, the country’s largest bank SBI had refrained from sharing its ATMs with cooperative Banks and NBFC customers on the grounds that it has made large capital investments and now needed to recover these investments by charging appropriately for use of ATMs. RBI’s move might now force SBI to join the fray.

In just over a year from 2008 , bank customers can freely use their ATM cards to withdraw cash from any ATM installed by various commercial banks across the country. For now, they can access any of the 32,000-odd ATMs of various banks free of transaction charge for balance enquiry and transaction. Also with immediate effect, the central bank of Indian banking system has barred banks from charging any fees for customers using their own banks' ATMs and cut charges on withdrawal from third-party ATMs to Rs 20 per transaction.

With RBI issuing a diktat that the cost of using third-party ATMs can't be passed on to consumers, commercial banks will now have to work out some kind of a transfer-pricing structure to defray the costs of those banks that have made huge capital expenditure. ATM service providers say that banks will have to work out the cost of each ATM transaction and net out the charges they have to pay each other based on their mutual network usage.

About Author

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Paisawaisa as a finance specialist.

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