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Transaction costs for those accessing ATMs of third-party banks will come down by 55%. The move follows Institute for Development and Research in Banking Technology (IDRBT) decision to cut fees for accessing its National Financial Switch which provides interconnectivity between ATM networks.

The NFS helps a bank plug in its ATM network to networks of other banks. The NFS, which is a shared ATM network, now has 16 banks and 5,000 ATMs. Around 12,000 transactions are carried out daily.

At present, the transaction charges are Rs 20, out of which, Rs 18 goes to the bank and Rs 2 goes to the institute. From October 1, 2005, it will be reduced to Rs 9; Rs 8 for the bank and Re 1 for IDRBT

The reduction in the charges will benefit customers of 16 banks that are members of the National Financial Switch (NFS). These include Allahabad Bank, Andhra Bank, Bank of Baroda, Corporation Bank, ICICI Bank, IDBI Bank, J&K Bank, Karnataka Bank, Punjab National Bank, United Western Bank, Dhanalakshmi Bank, Tamilnad Mercantile Bank, South Indian Bank, Oriental Bank of Commerce, Karur Vysya Bank and Yes Bank.

RBI feels that with the reduction most other banks will also become members instead of entering into bilateral agreements for ATM sharing. It will also encourage banks to absorb the cost rather than passing it off to the customers.

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