6 banks join hands for fund transfer via ATM

You need not visit a bank branch or log on to internet for transferring money from your account. Just walk into an automated teller machine (ATM).

This comes in the wake of six Indian banks deciding to offer fund transfer facility through ATMs through a shared network - Mitr.

The banks, Punjab National Bank (PNB), Indian Bank, Oriental Bank of Commerce (OBC), Karur Vysya Bank, IndusInd Bank and UCO Bank, are part of the ATM sharing network, Mitr, with PNB as the settlement bank. This inter-bank network of 2,600 ATMs will be managed by FSSNet.

Besides options for balance enquiry, cash withdrawal and cash deposit, the main menu of the ATM would now also include a fund transfer option. The customer can transfer money by entering details of the account to which funds are to be moved.

According to KS Bajwa, general manager, operations, payment and settlement, PNB, the bank has to seek formal approval from the RBI. The limit under 'card to card transfers' will be as specified by the central bank. At present, cash withdrawals of up to Rs 25,000 are permitted at ATMs.

"We are in the process of meeting these requirements and determining the financials and time required," said Bajwa. Internationally, fund transfers through ATMs, carry a charge.

"However, we may look at making such transactions free for some period or upto a particular amount after a study of the costs involved in providing this facility," said Bajwa.

The routing of banking transactions through ATMs and other electronic channels enables banks to reduce operating cost. Banking transactions executed at a branch will cost a bank around Rs 40. In metros, this cost goes up to Rs 70 as the real estate cost is very high. But if the transaction is routed through an ATM, the cost comes down to Rs 18.

To enable such transactions, the banks will modify the switch for securing the electronic fund transfer and the server. The ATM screen format wIll be altered so that the customer can enter the account number for transferring the funds.

PNB has already held preliminary discussions with the Reserve Bank of India (RBI) for approval and is speaking to its technology partners to effect the necessary modifications in software.

The process is expected to be completed in 10-12 weeks. Once PNB, which has a network of over 1000 ATMs, makes the necessary modifications, the other banks will follow.