Reserve Bank of India issued a draft notification to Indian banks to reduce the charges for use of ATM service. Banks charge a variable fee from customer accounts for withdrawing money from ATM of other banks. RBI has proposed a ceiling of Rs 20 for such transactions while the current charges are around Rs 50 for each transaction.

RBI has further said that banks must not charge any money for using other services like balance inquiry or account mini statement.

The draft approach paper on Fair Pricing and Enhanced Access of Bank ATMs has come as a shock for major banks including SBI, Axis Bank, ICICI Bank and HDFC Bank. These large capital banks have built huge ATM networks by spending a lot of money.

Banking experts believe that the step is good for developed markets. As India still lacks ATM penetration, the draft may reduce the speed of installation of new ATM services across India.

RBI's decision will be welcomed by consumers. RBI has taken many steps in recent months to reform banking sector.