MUMBAI: State-owned banks with foreign branches have asked the
regulator to discriminate between domestic and foreign banks, when it
comes to allowing customer access to shared ATM networks.
Public sector banks have raised the issue of reciprocity, as they are
allowed very limited access in overseas markets — both in terms of
branches as well as ATMs. In India, the Reserve Bank of India grants
licences to set up branches and ATM installations and customers of
foreign banks can access third-party ATMs, often free of charge.
For instance, although SBI has obtained a licence to set up 25 outlets
in Singapore, the country's largest bank will not have access to the
domestic network. It can, however, participate in a foreign bank's ATM
network in Singapore. The suggestion is understood to have been made
during informal meetings.
Bankers said while overseas regulators place restrictions on access to
their local markets, the Indian market is willy-nilly being opened up
further. A decade ago, majority of banking transactions were conducted
through the branch, today foreign and private banks see most customers
using the internet for the same. This is followed by automated teller
machines. Even subscriptions to new services such as credit cards and
demat accounts is done outside the branches.
Foreign banks have been building up retail assets in the country
through non-banking finance companies, which do not face any
restrictions on branch expansion. Bankers feel that considering that
interest in India is quite high, this is a good time to put conditions
of reciprocity on foreign banks.
In recent months, the central bank has given branch licences to a
couple of foreign banks who did not have a branch presence here. There
is a perception that licensing would be more liberal from 2009, since
RBI has promised foreign banks greater access to the Indian market.
From next year, RBI has asked banks not to pass on any charges to
customers for use of third-party ATMs. What this means is that the
customer of a small private bank, with a single ATM, will have the
same access to ATMs, as the customer of the bank with the largest
network.
The central bank has made available from April 2008, free access to
third-party ATMs for the purpose of balance enquiry. Also from April
2008, banks cannot impose a transaction charge of more than Rs 20 per
transaction on customers who withdraw from third-party ATMs.
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