SBI, Bank of Baroda Limit Cash Withdrawals from Micro-ATMs of Other Banks: Report

In a move that would majorly impact banking services in rural areas, State Bank of India (SBI) and Bank of Baroda (BoB) have limited the number of cash withdrawals for customers using micro-ATMs of other banks to just up to four times a month, according to a report in Economic Times.

Micro ATMs are the handheld point of sale terminals used to disburse cash in remote locations where bank branches cannot reach. Through micro-ATMs, banks can remotely connect to their core banking system and help customers undertake basic financial transactions. The banking correspondents handling micro ATMs are usually local agents and shopkeepers, while customers in rural areas mainly avail this service to access the cash subsidy they receive from the government into their ‘direct benefit transfer’ accounts.

Now, Bank of Baroda has modified its rules to allow customers to just do four transactions a month in case he/she uses the micro-ATM terminal of another bank, while SBI has limited it to just one. However, SBI account holders who are not part of the government’s direct benefit transfer scheme are allowed to do five such transactions a month, according to the report.

A Bank of Baroda spokesperson cited the malpractice of acquirer banks’ agents indulging in split transactions to earn more commissions as one of the reasons behind the move.

“We found that many of our customers were splitting one big cash-out into multiple small ones,” a senior banker told Economic Times. “While the customer does not get any benefit through such acts, retailers make extra money since their commissions are based on the number of transactions.”

As per the norms, if BoB customer uses a micro-ATM of any other bank, then BoB pays 0.5% of the transaction amount, or Rs 15, whichever is lower, to that bank. Retailers or agents get a share of this amount.

The move by the banks is likely to cause a significant drop in transactions undertaken through the Aadhaar-enabled Payment System (AePS) going ahead. According to the report, AePS transactions in September have already fallen nearly 9% September to 201 million from the 220 million seen in July, as per data by the National Payments Corporation of India, which manages the payment network.