In a striking revelation, the Indian government has disclosed that, while the State Bank of India (SBI) is earning significant fee income from automated teller machine (ATM) cash withdrawals, other public sector banks (PSBs) are struggling with financial losses in this domain. During the past five years, SBI earned an income of Rs2,043 crore from cash withdrawals at ATMs, while nine PSBs suffered a loss of Rs3,738.78 crore. On a cumulative basis, Punjab National Bank (PNB) and Canara Bank are the only other two PSBs that have earned a profit of Rs90.33 crore and Rs31.42 crore from ATM cash withdrawals, according to a written reply in the Lok Sabha.
According to the government's reply, SBI has consistently earned higher fee income from ATM transactions over the past five years, while other PSBs have suffered losses. The year-wise ATM fee income (or losses) figures for SBI and other PSBs are as follows:
NK Premachandran, a member of Parliament (MP), has asked the government about money earned by PSBs after the stipulated limit for withdrawals from ATMs.
Pankaj Chaudhary, minister of state for finance, says as per guidelines issued by the Reserve Bank of India (RBI), customers are eligible for five free transactions, including financial and non-financial transactions, every month from their own bank ATMs. "They (customers) are also eligible for a fixed number of free transactions, including financial and non-financial transactions, from other bank ATMs, viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, charges are levied for each ATM transaction, as per the respective Board approved policies of banks, and the ceiling or cap is Rs21 plus applicable taxes, if any, per transaction."
The response revealed that SBI, India's largest PSB, has successfully turned ATM cash transactions into a significant source of fee income, mainly due to its extensive network and structured fee policies. In contrast, other PSBs have been incurring losses, unable to balance operational costs against declining transaction volumes and fee structures.
Data shared by RBI shows that as of January 2025, PSBs have 135,908 ATMs installed across the country. As expected, SBI has the highest number of ATMs at 64,993 installed. It is followed by PNB at 12,974 ATMs and Canara Bank at 11,968 ATMs.
Additionally, banks are required to comply with RBI guidelines on service charges and minimum balance requirements which, often, limit their ability to recover costs effectively.
RBI's circulars from 2014 and 2015 permit banks to determine service charges based on their board-approved policies, but most PSBs have not been able to structure these in a way that makes ATM operations financially sustainable.
Mr Chaudhary, the minister, clarified that banks are allowed to set their own penal charges and service fees within the framework of RBI regulations.
However, it also noted that SBI has not been levying any penalties on customers for non-maintenance of minimum balance in regular savings accounts since March 2020, a move aimed at making banking more accessible but also potentially impacting revenue streams for smaller banks.
For accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY), no minimum balance is required, ensuring financial inclusion but further limiting banks' ability to generate revenue from these accounts.
As ATM usage patterns evolve with increasing digital transactions, PSBs need to recalibrate their ATM strategies to sustain operations and improve financial viability. SBI's ability to generate significant fee income from ATM transactions while other PSBs struggle presents a stark contrast that demands urgent policy attention.
With customer preferences shifting towards digital banking, the future of ATM fee income for PSBs will depend on how efficiently they adapt to the changing landscape while ensuring that financial inclusion remains a priority.
