Social ,04 May 2025

ATM Charges Hiked, FD Rates Increased in India | May 2025 Update

In a move that impacts millions of bank customers, ATM charges and fixed deposit (FD) rates across India have undergone revisions starting May 1, 2025. These changes, backed by new RBI guidelines and banks' internal adjustments, are aimed at reflecting the evolving cost structures and offering more competitive rates to savers.

Let’s dive deeper into what’s changed and what it means for you.

 

Changes in ATM Charges: What You Need to Know

Background:
The Reserve Bank of India (RBI) had reviewed the interchange and customer charges for ATM transactions to ensure a balance between customer convenience and cost recovery for banks. Following these recommendations, ATM charges have been updated.

Key Changes:

1. Free Transaction Limit Unchanged:
   Customers can still enjoy five free ATM transactions (including financial and non-financial transactions) per month at their bank’s ATMs.
   At other banks' ATMs, free transactions are allowed up to three times in metro cities and five times in non-metro areas.
2. Beyond Free Limits:

1. Earlier: ₹21 per transaction (after free limit)
2. Now (May 2025): ₹23 per transaction (+applicable taxes)

1. Interchange Fee:
   The interchange fee paid by the bank where the transaction takes place has increased marginally:

1. From ₹17 to ₹18 for financial transactions.
2. From ₹6 to ₹8 for non-financial transactions.

Why the Change?
Banks and white-label ATM operators cited increased operating costs, maintenance charges, cash handling expenses, and technology upgrades (like EMV chip-based card upgrades and biometric authentication) as major drivers for revising the charges.

 

Changes in FD (Fixed Deposit) Interest Rates: Who’s Offering What?

While ATM transactions saw a marginal cost increase for consumers, the good news came from several banks revising their FD interest rates upwards to attract more deposits amid tighter liquidity and rising inflationary pressures.

Here are some highlights:

Bank Name	Tenure	Previous Rate	New Rate (May 2025)
Shivalik Small Finance Bank	390 Days	8.15%	8.40%
IDFC First Bank	500 Days	7.25%	7.50%
RBL Bank	725 Days	7.10%	7.25%

 

Senior Citizens generally enjoy an additional interest rate benefit of 0.50% over regular customers.

 

Why Banks Are Increasing FD Rates:

1. Tightening Liquidity: Due to lesser inflows and tighter cash conditions, banks are trying to attract depositors.
2. Credit Growth Outpacing Deposit Growth: Banks are raising money to meet strong demand for loans.
3. Inflation Hedging: Higher returns help savers offset inflation to some extent.

 

Impact on Consumers

For ATM Users:

1. Frequent cash withdrawals may now cost slightly more.
2. It’s advisable to optimize ATM visits and consider digital payments wherever possible.

For Savers:

1. A good opportunity to lock into higher FD rates, especially with reputable small finance banks offering attractive options.
2. Comparing across banks (including SFBs and private banks) could help maximize returns.
3. Laddering FDs across different tenures might help manage liquidity and yield better returns in the current environment.

 

Tips for Consumers

1. Use digital wallets, UPI, and internet banking to minimize ATM withdrawals and avoid extra charges.
2. Review and compare FD rates from multiple banks — sometimes small finance banks offer better rates than major private players.
3. Stay updated on RBI announcements — future monetary policy decisions could influence both lending and deposit rates.

 

Conclusion

The financial landscape in India is changing, and May 2025’s updates to ATM charges and FD rates are part of a broader trend toward digitalization, cost efficiency, and offering better saving instruments.
While the hike in ATM fees may pinch a little, the rise in FD rates offers an opportunity for conservative investors to earn better returns.

As always, being aware of these changes and planning your financial moves wisely can help you stay ahead in your personal finance journey.