Page 7 - Banking Finance May 2025

BANK UPDATE

to credit hinder small farmers' ability
to plan for long-term needs, often re- PSBs Transfer Over Rs 45,000 Crore in Unclaimed De-
stricting their productivity, growth, posits to DEA Fund
and excluding them from the wider Public sector banks have transferred more than Rs 45,000 crore worth of
economy," the statement said.
unclaimed deposits to the Depositor Education and Awareness (DEA) Fund
By providing easier access to credit, maintained by the Reserve Bank of India (RBI) between 2019-20 and De-
the initiative aims to foster income cember 31, 2024, the Finance Ministry informed the Lok Sabha.
generation and agricultural produc- Savings and current account balances that remain inactive for 10 years, and
tion, thereby enhancing the livelihood term deposits not claimed within 10 years of maturity, are classified as un-
of underserved communities.
claimed and transferred to the DEA Fund under the 2014 scheme.
The move aligns with broader efforts However, funds remain recoverable. "The depositors or their legal heirs may
to improve economic inclusion and pro- claim unclaimed deposits from their respective banks, and upon verification,
ductivity in India's crucial agricultural banks process the repayment, including applicable interest in the case of
sector.
interest-bearing accounts. Banks then lodge a claim with RBI for reimburse-
ment from the DEA Fund," Minister of State for Finance Pankaj Chaudhary
RBI Increases ATM Trans- said in a written reply.
action Charges to Rs 23
Effective May 1
Bank Account Holders to Trillion as RBI Plans OMO
The Reserve Bank of India (RBI) has
announced an increase in the ATM Name Four Nominees as Purchases
withdrawal fee for transactions beyond Parliament Passes New Bill The Reserve Bank of India (RBI) an-
the free limit, raising the cap from Rs nounced plans to inject liquidity into
21 to Rs 23 per transaction. This revi- Parliament has approved the Banking the banking system by purchasing Rs
sion, effective from May 1, 2025, Laws (Amendment) Bill, 2024, allowing 80,000 crore worth of government
comes in the wake of the National account holders to nominate up to four securities across four tranches in April,
Payments Corporation of India (NPCI) individuals for their accounts, a move despite a recent shift from liquidity
hiking the ATM interchange fee from expected to ease deposit management deficit to surplus.
Rs 17 to Rs 19 for financial transactions in the event of the holder's demise.
The system's net liquidity surplus stood
and from Rs 6 to Rs 7 for non-financial The Bill, which also raises the thresh-
transactions. old for defining a 'substantial interest' at Rs 1.42 trillion as of the latest RBI
data, marking a reversal after four
Under existing guidelines, customers are in a bank from Rs 5 lakh to Rs 2 crore, months of consistent deficits.
entitled to five free transactions each was passed by a voice vote in the Rajya
month at their own bank's ATMs and Sabha. The Lok Sabha had already Alok Singh, Group Head of Treasury at
three to five free transactions at other cleared the legislation earlier. CSB Bank, said, "The market wasn't
expecting such aggressive OMO from
banks' ATMs depending on location. Following the President's assent, the the RBI. They (the RBI) could have al-
Mani Mamallan, Founder, Chairman & provisions of the Bill will be imple- lowed the deficit to run and waited for
Managing Director of Electronic Pay- mented in accordance with a pre- government spending to pick up. In-
ment and Services (EPS), commented, scribed timeline. The changes are ex- stead, the immediate announcement
"The ATM network can decide the in- pected to provide greater flexibility clearly signals their intent to inject
terchange fee between banks. In the and clarity for depositors and banks long-term liquidity."
case of ATMs on the NFS network, alike, modernising nominee rules that
which is operated by NPCI, the fees will had been unchanged for decades. The four scheduled open market op-
be revised to Rs. 19 for financial trans- erations are set for April 3, April 8,
actions and Rs. 7 for non-financial Banking System Liquidity April 22, and April 29, reflecting the
transactions with effect from May 1, RBI's proactive stance on managing li-
2025." Turns Surplus at Rs 1.42 quidity conditions.

BANKING FINANCE | MAY | 2025 | 7