Steering group set up to address ATM pricing issue

The Reserve Bank of India-sponsored National Financial Switch (NFS) has formed a steering group of four member banks to decide on the ATM transaction charge per usage.

The decision, subject to approval of the Central bank, has been taken following ICICI Bank's threat to withdraw from NFS on the issue of charge per transaction for use of an ATM of one bank by the customer of another.

The Institute for Development and Research in Banking Technology (IDRBT), which manages NFS for providing inter-connectivity to ATM networks and for funds settlement, has formed a user group comprising 18 member banks to deliberate on various matters including procedures and fees and also a steering group to decide on issues concerning operations and policies, an IDRBT official said.

ICICI Bank had withdrawn its highly-used 40 ATMs in Mumbai from the NFS platform after IDRBT announced a sharp cut in ATM charge to Rs 9 per transaction from Rs 20 with effect from October 1, 2005. ICICI Bank is currently the only bank with a large ATM network participating in the NFS.

State Bank of India and UTI Bank, the other banks with large ATM networks, are not yet members of NFS. The official said the formation of a user group and a steering group would broadbase the management of NFS and help increase participation from more banks and volumes.

The Clearing Corporation of India Limited (CCIL) is the clearing and settlement agency for the NFS. CCIL also facilitates the NFS Disaster Recovery Site from its premises in Mumbai.

NFS had reduced transaction charge to enable many more banks to become its members and save them from the trouble of having to individually enter into bilateral agreements with banks having large ATM networks.