RBI imposed restriction on ATM use to stop misuse

After April 1, this year it had become easy for the bank customers to with draw money from ATMs as with the implementation of Reserve Bank of India (RBI) new norms for the bank customers doing the transactions at other banks ATM was made free, but the bank with which the customer had the account, has to pay to the other bank for using the ATM, by its customer. But this led to the misuse of the facility by the customers.

On the proposal of Indian Banks Association (IBA), the representative organization of private and public sector banks in India RBI had imposed restriction on the amount and the number of cash withdrawals at ATMs of other banks. Speaking on payment and settlement systems at Corporation Bank head office, G Padmanabhan, chief general manager, RBI said, the recent restrictions imposed by the central bank are based on initial feedback it had received on free usage of ATM services across banks. He said the restrictions are being imposed only to stop misuse of the facility and such measures are not going to hinder normal usage.

Padmanabhan emphasizing on the need for technological improvements in India’s financial system stated, "The success of initiatives should be seen at the counters rather than merely at data centers of the Banks". He added there is a need to focus on strengthening the payment systems so as to safeguard the customer’s interest.

Banks should work hard to promote RBI’s initiatives in implementing secure and sound payment systems. RBI has taken a decision that banks will remain the intermediaries for transfer of funds irrespective of technology service provider to provide such facilities, he informed. Padmanabhan said RBI is also thinking on levying higher penalty for undue retention of customer’s funds, dispatched through electronic payment mechanism.

Padmanabhan also informed with the successful introduction of cheque truncation system, in Delhi the physical movement of cheque has totally eliminated and RBI is considering of introducing the same in Chennai.

J M Garg, chairman and managing director of Corporation Bank, told that over a period of time dramatic changes have occurred in the payment and settlement system. He stressed the settlement system should be made so efficient so that physical clearing can be switched to electronic settlement based clearing. In the beginning B R Bhat, general manager welcomed the gathering and at the end M R Nayak, general manager gave vote of thanks speech.