Madras HC dismisses PIL seeking unlimited free ATM transactions

MADURAI: The Madurai bench of the Madras high court on Thursday dismissed a petition that sought to quash two circulars of the Reserve Bank of India (RBI) regulating the usage of number of free transactions in ATMs.

The division bench of Chief Justice Sanjay Kishan Kaul and Justice Nooty Ramamohana Rao dismissed the petition filed in 2014 on the ground that it is a policy decision of the RBI.

The petitioner, S Thamizharasan of Madurai, had stated that the transactions through automated teller machines (ATMs) are very useful to bank customers. The number of ATMs rose to 1.6 lakh at the end of March 2014 from 27,000 ATMs in 2007.

Subsequently, the Indian Banks Association (IBA) urged the RBI to remove free transactions at the other banks’ ATMs in metro cities and large townships in the country.

Consequently, the RBI issued a circular on August 14, 2014 and a clarification circular on October 10 in the same year. According to the first circular, the number of free transactions of the saving bank account holders were reduced to three from five free transactions per month and the change will be effected in six metro cities – Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.

In the clarification circular, the RBI stated that three transactions would be free of charge if it is done at other banks’ ATMs situated in the six metros. If the transactions were carried out in metros and other non-metro cities, then the number of free transactions would be five.

The circular defeated the principle of enabling better service to the customers. Besides, many countries have permitted multiple free transactions in the home banks as well as other banks. Hence, both the RBI circulars should be quashed as illegal and the IBA should be directed not to collect charges from the customers, the petitioner said.