Cashless Society – Digital Payments, Demonetization, etc.

VG Kannan committee to review ATM pricing


From UPSC perspective, the following things are important :

Prelims level : VG Kannan committee

Mains level : Read the attached story

VG Kannan committee

  • The RBI has set up a six-member committee, headed by VG Kannan, Chief Executive, Indian Banks’ Association, to review the ATM interchange fee structure.
  • It aims for giving a fillip to ATM deployment in unbanked areas.

Terms of reference

  • The committee will review the existing structures and patterns of costs, charges and interchange fees for ATM transactions.
  • It will also review the overall patterns of usage of ATMs by cardholders and assess the impact, if any, on charges and interchange fees.
  • It will assess the entire gamut of costs in respect of the ATM ecosystem and make recommendations on the optimal charge/interchange fee structure and pattern.

Why appoint such committee?

  • When a customer transacts at another bank’s ATM, his bank has to pay an interchange fee to the other bank.
  • The cost of operating ATMs has steadfastly increased.
  • Hence, Banks and white-label ATM operators (WLAOs) want the RBI to raise ATM interchange fee from ₹15 to ₹18 for cash withdrawals and card-to-card fund transfers, and from ₹5 to ₹8 for other non-financial transactions.


White Label ATM

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