Cap on withdrawals from ATMs policy decision: RBI to HC

New Delhi: The Reserve Bank of India has told the Delhi High Court that the cap on the number of withdrawals from ATMs by banking customers without being charged is a policy decision taken in public interest.

A bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal was also informed by RBI that the ATM facility was made available with a view to reduce “cash usage and increase electronic transactions in the country”.

RBI was responding to a public interest litigation (PIL) filed by advocate Swati Aggarwal, seeking directions to allow banking customers to make an unlimited number of transactions free of any charge on their own bank ATMs.

India’s central banking institution, which controls the monetary policy of the rupee, however, opposed the PIL, saying it is “not maintainable and is liable to be dismissed, as RBI has not violated any laws of the land”.

“The PIL is not meant to be a weapon to challenge the financial or economic decisions which are taken by the RBI in exercise of their administrative/ statutory powers and in the public interest…,” RBI’s counsel said.

On this, the bench has asked the RBI to file an affidavit with regard to its contention made before it by next date of hearing, December 5.

The RBI’s oral submissions were made after the high court on last date of hearing had questioned its decision to put a cap on withdrawals by banking customers using their ATM cards, saying account holders were being “unnecessarily taxed”.

As per RBI’s new guidelines, 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 and every transaction beyond this limit will be charged Rs 20 per use.
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The RBI’s counsel has further said it neither violated any fundamental rights or any legal rights of any citizen, nor has acted in any unconstitutional, illegal, arbitrary and high-handed manner.

The petitioner, however, claimed that the guidelines were issued at the behest of a few banks and IBA (Indian Bank’s Association), which had approached RBI seeking changes in the extant instructions regarding free transactions at other banks’ Automatic Teller Machines (ATMs).

The PIL also contended that levying charges were highly “arbitrary and unjustified” besides being “discriminatory and against good banking practices and reforms and a backward move”.

It said that the RBI guidelines were against international practices in relation to use of own bank ATMs followed across the world.

“In almost all modern economies of the world, there is no cap on the number of transactions one can make on own bank ATM and unlimited number of transactions remain free of charge on their own bank ATMs,” it has said.

The plea has contended that RBI decision is contradictory to its own earlier 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”.