Penalty Charges on failed transactions due to insufficient balance at other banks ATM

Imagine this situation. You are in urgent need of cash and looking around for your bank ATM, but you are not able to locate one, but you can see other banks ATM and then finally you give up and want to withdraw the cash from other banks ATM knowing that its FREE to withdraw the money from other banks ATM (atleast for 3-5 times in a month).

atm decline charges for failed transactions

(Image Source)

Then, You go to other bank ATM and withdraw Rs 5,000, but you see the message on screen “Insufficient Balance, transaction Failed” only to realize that in a hurry, you have punched in an extra ZERO and have tried to withdraw Rs 50,000. You then ignore this minor mistake thinking that it means nothing and then finally you withdraw Rs 5,000 and leave the ATM happily!.

Howevcer, By the end of month – when you are looking at your bank statement, you are in horror to see that there is some Rs 28 debited from your account as ATM decline charges and you are like – “What the hell is that” ? You talk to customer care and come to know that there is some “ATM decline Charges due to insufficient balance”, you are not happy as you were not aware about it and customer care just has one answer – “Its as per RBI guidelines” !

ATM Decline Charges due to Insufficient Funds

Almost all the banks charge you a penalty charge if your transaction at other banks ATM is declined due to insufficient fund. So if you have an ICICI bank account and you are withdrawing money from HDFC or SBI ATM and if the transaction fails due to insufficient balance or less bank notes inside the ATM, the transaction will fail and you will be charged! .

Here is a real life incident which happened with my Father, when back home, he tried to take out some money from SBI bank ATM (the account is with ICICI bank) and he was not that sure of the exact balance and he tried to take out the money 3 times in a row. We only realized about this charge when I was looking at the bank statement at the end of the month.


2 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00
3 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00
4 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00


How is this ATM decline charge calculated ?
Decline charges are the base charges + service tax ! . Each bank is free to define the penalty charge. So incase of ICICI Bank (and other several banks), the penalty charges are Rs 25 per failed transaction. So when you add service tax, the final figure is Rs 28 (approx). Here are some of the bank penalty charges I found out on their websites.

ATM decline charges for insufficient balance

ATM decline charges when there are insufficient notes in the ATM

If its customer mistake, one can still understand the penalty charges, but what do you say about charges, when your transaction is declined because the bank mistake ! , like if notes in the ATM are not sufficient? What if you are trying to withdraw Rs 5,000 but there are just Rs 100 notes in the ATM (Rs 500 are over) and the transaction failed (maximum 40 notes at a time is allowed) and you are charged for the failed transaction in other bank ATM ?

Here is one incident !

Dear Sir, I the undersigned wish to inform you that i am having saving account no. ******84712 with State Bank of India, Vadgaon Branch, Pune. When I was having balance of Rs.5106.19 (9th January 2014) in my account I went to SBI ATM at laxmi road, Pune but due to technical reason it was not in working position. So I went to opposite Bank of India, Laxmi Road ATM. When I tried to withdraw Rs.3300/- from that ATM it declined saying insufficient balance when I checked with security guard there he informed me that there are only 500 rs. notes available so you withdraw in multiples of 500 only.

So I withdrew Rs.3500/- (ATM 40091 BOI LAXMI ROAD II PUNE MHIN). When i checked today my account it is showing TO TRANSFER INSUF BAL ATM DECLINE CHARGE – ****** Transfer to ******14906 Rs.17/-. Will you please explain me the reason behind this charges. (Source)

Here is one more experience you should read where bank had charged a customer for no mistake !

My friend once had a bad experience with SBI credit card. During some emergency, using his SBI Credit card he wanted to withdraw Rs.10000 from an SBI ATM. He entered Rs.10000 but the ATM refused to dispense that amount and gave a message that it could dispense only 40 notes at a time. Unfortunately only Rs.100 were present in the ATM (This point was not mentioned any where). So, he had to use his card thrice to get the required amount (Rs. 4000 X 2 times and Rs.2000 X 1). After he got his credit card statement, we were surprised to see that he was charged, cash withdrawal charges – 3 times (Rs.250 X 3 = Rs.750). Had the ATM been filled with Rs.1000 notes, the transaction would have been only one and my friend could have saved Rs.500. Is this ethical to charge the customers for such things? (Source)

Have you been charged for Failed ATM transaction due to insufficient balance at some other bank ATM ? Do you feel its justified ?

89 CommentsAdd Comment

  1. Laxmiprasad

    Hello Guys,

    I have faced same problem Many Many times
    but iam gald to say that i got refund of the all the amount which i have been debited from my account

    I have an account with ICICI bank ..
    mostly i wont check my balance with the ATM ..i use Online Banking so there is not much Occasions
    where i used to go bank and when i have to Go i wash out all the money with in 3 transactions..

    Let me tell you one of my experience

    I have used my card in a Dmart Hyderabad ..After i completed my shopping
    i have giving my debit card for payment at the bill counter ..shocking it says declined.i asked him to swipe it again as i was sure about the balance which i have checked online a hour i move to shopping as i was sure i was asking him to swipe it again and again but no use

    as i went to near ATM and check the balance there was some amount debited to the RD which has to be debited a 3 days before ..i unknowingly asked the person to swipe it for 5 times

    after a month ..i have seen my account is debited with 28 rupees for 5 times
    i was shocked to see the transaction.

    Guys frankly saying i hate to call the customer service and holding for minutes together to get the Representative to the line and we need to waste the balance in the mobile ..for that ..

    That why i use customer care email id which is more responsible and accountable to the customer and
    i request you all use email than a call .. as there will be a proof of conversation which you having with the representative ..that will be the good record if we move to the consumer court ..

    You wont be having any proof or record of the conversation if you talk to them on phone .
    and they will never provide you the conversation audio if you ask.. i hope you guys got the tricks the bank play

    Let come to my experience i have placed
    email regarding my declined charges ..they have reversed the amount to my account
    not only this declined charges ..a month back i have been debited with a Dcard yearly charges ..of 168 ruppes
    where i have place a email .and i got it reversed by couple of email

    I don’t understand why should we pay D card charges every year when we are already payed for the card first time of rupees 250 for the card ..

    This is the Email

    ” Dear MR. Prasad,

    We understand your concern.

    we inform that Debit CARD FEE 4546 APR 15-MAR 16 Rs 168.54 has been reversed on June 12,2015.and point of sale decline charges Rs.28.50 has been reversed on June 23,2015.

    We thank you for giving us an opportunity to be of service to you.

    Sincerely,

    Rupa,

    Customer Service Officer

    ICICI Bank Limited

    NEVER SHARE your Card number, CVV, PIN, OTP, Internet Banking User ID, Password or URN with anyone, even if the caller claims to be a bank employee. Sharing these details can lead to unauthorised access to your account.

    On 6/24/2015 5:48:33 PM ”

    I got only one transaction reversed
    and i placed a email for the other 4 transaction to be reversed ..

    AND GUYS THERE IS NOT RBI RULE TILL NOW SAYING TO THE BANKS TO TAKE AWAY THE CUSTOMERS MONEY IN WHAT EVERY THE POSSIBLE WAYS

    BANKS HAVE ESTABLISHED FOR THERE BUSINESS NO FOR THE CUSTOMERS
    WE THE CUSTOMERS MAINTAINING THE BALANCE MAKING BANK PEOPLE LIVE A LUXURIES LIFE

    GO GUYS MAIL TO YOUR BANKS AND GET YOUR HARD EARN MONEY BACK TO YOUR ACCOUNT AND ENJOY YOUR EVERY EARNED PENNY ..

    Bank are getting billions of rupees profit apart from there maintenance of the staff , banks space rents and ATM machines,

    SO RAISE YOU VOICE OR EMAIL OR WHAT ELSE TO WANT TO RAISE BUT FINALLY GET YOUR MONEY BACK

    PLEASE USE EMAIL FOR FREE OF COST AND FOR PROOF ..

    I am sure i will get my other 4 transactions back ..if not also i am not worried i will appeal to the consumer court and will place a PIL to make it transparent to these kind of issues..
    you can find your respective customer care email addresses in internet or on your introduction pack

    ALL the best ..Guys

  2. Man

    I was also not aware but the same happened with me last week. I am a SBI customer and withdrew fro Bank of maharashtra ATM. Bank charged ₹ 17 per declined transaction for insufficient funds.

  3. rajiv

    Too bad.. din’t saw it earlier, I lost ~120 for four decilned transactions,
    don’t feel it is justified at all. They should atleast send one sms stating the same.

  4. T. newmei

    Its really bad the way this ATM thing works. I have about rs 8000/- and since there is a bandh in my city tomorrow, i went to take out just rs 2000/- with my SBI ATM card. First it was declined saying there is insufficient fund. so i checked my balance and found that i still have around 8000/- balance!. So i went to another SBI ATM booth and there the same thing is repeated. This time i took out a mini statement of my transaction and to my surprise, i found that for each attempt i had been charged Rs 17. I found that they had deducted 17×3=51 rupees!. This is not ethical and the bank should rectify this kind of problem which is not the fault of the customer at all!.

  5. rakesh kumar

    i have experienced same incident many times.. i dont know what is the problem…can anybody reply me.. when i checked my account statement it was written like this…
    09-aug-2014 To transfer insuf bal pos decline charge-080814
    Transfer to 98353029214 Rs.17…
    whose account number is this ? Please tell me…Bro

  6. Samir Das

    YESTERDAY I HAPPENED TO ME . I WAS USING AXIS BANK ATM TO WITHDRAW MONEY FROM ALLAHABAD BANK ACCOUNT BUT MISTAKENLY USED SBI CARD WHERE FUND WAS INSUFFICIENT , AND SERVICE DECLINED . AGAIN I TRIED AND GOT BOUNCE . THEN I GOT THAT POINT . BUT I THOUGHT THAT THIS IS THE LAST OF MONTH AND I HAVE SOME FREE USAGE AT OTHERS ATM . BUT WHEN I CHECKED STATEMENT OF MY SBI ACCOUNT TODAY 17+17 HAD BEEN CHARGED. VERY BAD EXPERIENCE .

  7. Rs Ravindra

    Hi Manish,

    Are such “Insufficient Funds” charges also applicable for online transactions ?
    Like, for example, few days ago, I tried to create an FD in ICICI Bank, using other Bank debit card option, but selected ICICI Bank as the Funds source by mistake, because of which I got the message “Insufficient Funds in the account”. I thereby promptly corrected the option to “Other Bank Debit Card” and created the FD. However, now I can see a debit transaction of Rs. 39 /- in my ICICI account, which, after enquiring from Customer Care , I got to know, is for insufficient funds.

    Is it correct for the bank to deduct such charges ? It makes no sense to me, as the transaction wasn’t even completed in the first place. Isn’t the insufficient funds parameter just supposed to be a check rather than a mechanism to collect unwarranted charges from the customers ?

    Ravindra

  8. Vijay

    Hi Manish,
    I came across the situation with SBI ATM (with SBI card). They are collecting 17 rs for declined transaction. I think its unfair coz they are declining the transaction and charging as if they have given money for the credit though the account is out of funds.
    @other readers I could see the term Service by Govt Banks. But in my opinion they are not providing any service as they are charging like anything from common people and feeding tycoons (like Malya). Really shame that the Govts are always in the service of Richies and not at all bothered about the common man interests.

    Vijay

  9. Sunil Kumar L G

    In the second scenario, where the ATM doesn’t have sufficient notes and u still end up paying the penalty, Isn’t this a clear cut case of illegal gains/service deficiency. Why not question them in Consumer forums and also complaint to the RBI(Though the channel is to be followed).

  10. phaneendra

    I have been using my debit card from past 5 years with out worrying much about the penality charges. Thansks a lot for sharing the information.

  11. Bhupesh Lohani

    I have charged Rs.17/- for Insufficient balance in State Bank of Hyderabad branch, even I am a customer of SBI. How could they charged to the customer when he is using their own Group Bank’s ATM. I did’nt understand this.

      • chinthub

        You can use STATE BANK ATM card in any of the STATE BANK ATM. I confirmed this by calling customer care long time back when the rule of 5 times a month usage came into existence. Since then I am using too and never had a trouble.

        But I did have a trouble similar to the topic, where they charged me Rs 17/- as ATM declination charge. My account was having only Rs 300/- balance, and I wanted to take Rs 200/- from State Bank ATM. But when I keyed for Rs 200/-, a message said that the currency denomination not available. Then I tried Rs 500/- ( I didn’t know that time the correct balance of my account), but a message and slip came saying insufficient balance. So I went to another SB ATM where they Rs 100/- notes and took Rs 200/- and from there I learned I had only Rs 300/- balance.

        But after few days when I checked online statement, I saw the ATM declination fees. I immediately called the customer care and registered a complaint. There was no reply for almost 2 weeks. Then I send a mail to grievance readdressall in Mumbai office. I got the amount Rs 17/- credited back to my account the next day.

  12. prasad jangam

    As I didnt maintain my minimum balance in Axis Bank they charged penality but along with that they charged an additional 100 bucks as Service Charge on the penality of Rs. 750. Is that correct cause there is no service delivered so how can they charge service charge ?

  13. Kishore

    This is really a good information you have given. I also was shocked when I saw 19 rupess deducted in my SBI account. What should be the solution for this

  14. Moorthy

    For the credit card transaction, the fee is different from debit cards. Each transaction is chargeable. I don’t see anything wrong here. For the bank, you did a valid transaction and for that, they charged you. The customer is aware that, his requested denomination is not available and he made 3 valid transaction on other bank ATM.

    I wish the customer should be aware of the bank charges for any kind of transaction. Thus, easily avoid the transaction charges and not to blame the banks.

    And, thank you Manish, for creating such awareness to public .

  15. Moorthy

    For using other bank’s ATM, NSF (non sufficient fund) transaction is chargeable. And, it’s logical. You are using your bank, other bank and switching company resources. its a common practice all over the world. I am working in one of switching company in middle east.

    But, charging for ATM’s insufficient fund is not correct. Technically, the transaction is declined and that should not be charged. A customer can raise this issue to his bank.

  16. 23guv

    This is also true for Debit card transactions that are declined due to in-sufficient balance. It happened in my case. But, I was lucky as I requested ICICI bank to refund it for one time as I was not aware of it and they responded positively.

    Cheers

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