Higher ATM fees, bank mergers and more: Major changes roll out from May 1

New Delhi: Starting May 1, 2025, several key changes in India’s banking system will come into effect, impacting ATM users, regional rural banks, and savings account holders. These changes are part of broader reforms aimed at improving operational efficiency, enhancing customer service, and aligning with evolving banking infrastructure costs.

ATM transaction charges increased

The Reserve Bank of India (RBI) has approved a hike in ATM transaction charges, applicable when users exceed their monthly free withdrawal limit. From May 1, customers will be charged Rs 23 per transaction, up from the current Rs 21, once they go beyond the allowed number of free transactions.

Customers will still be entitled to have five free transactions (financial and non-financial combined) per month at ATMs of their own bank, three free transactions per month at other-bank ATMs in metro cities and five free transactions per month at other-bank ATMs in non-metro cities.

These charges are aimed at covering the rising costs of ATM operations and servicing customers of other banks.

One State-One RRB Policy: Bank mergers in 11 States

The Finance Ministry has launched the ‘One State-One RRB’ (Regional Rural Bank) initiative. Beginning May 1, 15 RRBs across 11 states will be merged into a single RRB per state, reducing the total number of RRBs from 43 to 28.

The states involved in this consolidation include- Andhra Pradesh, Uttar Pradesh, West Bengal, Bihar, Gujarat, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan.

The goal of this initiative is to improve operational efficiency, reduce costs, and strengthen rural banking services. A review meeting chaired by the Finance Minister is also expected to assess the implementation and outcomes of this policy.

Changes in Savings and Fixed Deposit interest payments

From May 1, RBL Bank will begin paying interest on savings accounts monthly instead of quarterly. Interest will still be calculated on a daily basis but will now be credited every month. The bank currently offers interest rates of up to 7%, depending on the account balance.

In another update, Shriram Finance Limited (SFL) has revised its Fixed Deposit (FD) interest rates. The company has introduced special incentives:

- Senior citizens (60 years and above) will receive an additional 0.50% interest annually.

- Women depositors will get an extra 0.10% interest annually.

These changes are intended to provide better returns and greater flexibility for depositors, especially retirees and women investors.