Stating that no banks have so far approached the government seeking approval to raise ATM fees, financial services secretary Rajiv Takru said a final decision will have to be taken by the Reserve Bank in this regard.
"As far as I am concerned I would very much like ATM services to be free. If banks make the services expensive then customers will probably end up at the bank windows. A teller service is far more expensive than ATM service," Takru told reporters after inaugurating the banking technology expo here.
He also called for a re-look at orders of some state governments asking banks to have round-the-clock security at ATMs.
However, admitting that ATM services should be sustainable, he said banks will have to look at the economics of this and encourage customers to use ATMs more is one of the ways to make them profitable.
Notably, after an attack on a Corporation Bank employee at an ATM in Bangalore last November, many states want round-the-clock security at all the ATMs.
Banks' umbrella body IBA met last month and calculated that this will incur an additional Rs 40,000 per ATM per month and will push this vertical of banks into more losses.
The IBA has asked RBI to cap the number of free transactions to five per month across any ATM network from the current practice of giving them unlimited transactions at own bank ATMs and five at other bank ATMs. From sixth transaction onwards, the banks charge a customer Rs 20 per transaction.
Banks net-off the transactions at the back-end and pay Rs 15 plus taxes for every transaction, which is the interchange fees.
Following this, the National Payments Corporation, which is the national body handling the payment switch system, convened a meeting of banks last week and formed a committee of six banks to offer suggestions around cost management and charges for use of the ubiquitous machines.
The members of the panel are State Bank of India, Bank of Baroda, Punjab National Bank, ICICI Bank, Axis Bank and HDFC Bank, and will submit their report in a month.