The Reserve Bank of India (RBI) announced on Friday (April 8) that the cardless cash withdrawal system has been proposed to be made available in all bank branches and automated teller machines (ATMs) across India. The facility will be made available to bank customers with the help of a unified payments interface (UPI). This was one of the critical decisions made at the Monetary Policy Committee (MPC) meet of the RBI this year.
"We have now proposed to make cardless cash withdrawal facility available across all banks and ATM networks in the country using the UPI," RBI Governor Shaktikanta Das said.
"At present, this facility through ATMs is limited only to a few banks," Das said while making the announcement.
The RBI governor added that besides enhancing the ease of transactions, the absence of the need for physical cards for such transactions would help prevent frauds like card skimming, card cloning, etc, News18 reported.
"Apart from making digital payments smooth and consistent, one of the biggest contributions of UPI was facilitating a standardised flow for secure authentication to a bank account. This use case was made available everywhere with the ability to integrate not just with banking apps but also with third-party apps like Google Pay and PhonePe. There are many more use cases for UPI and this is what we see with cardless withdrawals from ATMs. While some banks have enabled this already, it is great to see that all banks in India would soon support this feature, which would further increase convenience and improve security," Mint quoted Sumit Gwalani, co-founder of neobank Fi as saying.
As the name suggests, a cardless cash withdrawal facility does not need bank customers to use their debit or credit cards while withdrawing cash from ATMs. The RBI has not stated how exactly the system will work through UPI, but it has been anticipated that bank ATMs will now have the option. After entering their UPI pin, the user can scan a QR code and withdraw cash.
At present, several banks like SBI, ICICI Bank, HDFC Bank and Kotak Mahindra Bank allow their customers to withdraw their money without using a card.
How To Withdraw Cash?
For SBI customers who want to withdraw more than Rs 10,000, they need to follow the below steps:
Step 1: Download the State Bank of India (SBI) mobile banking app, YONO
Step 2: Visit your nearest bank ATM
Step 3: Select the option to withdraw YONO cash
Step 4: After entering the amount (Rs 10,000 or more), a screen will pop up, prompting you to enter the One Time Password (OTP)
Step 5: Cardholders will get the OTP which they need to enter on the ATM screen to complete the transaction
How Does The Cardless Cash Withdrawal Facility Work?
- Savings account holders can initiate the cardless cash withdrawal facility through mobile as well as internet banking.
- Some banks in the country allow this facility through cardless cash withdrawal-enabled ATMs.
- The recipient has to visit the cardless cash withdrawal-enabled ATMs, where money can be withdrawn after entering the code received on the mobile number.
- Such transactions are capped at ₹5,000 or ₹10,000.
- Also, there is a cap on the maximum amount that can be transacted per account in a day
According to The Indian Express, for HDFC Bank customers, cardless cash withdrawals are restricted to a maximum of Rs 10,000 per day and Rs 25,000 per month. Also, such withdrawals come with a service fee of Rs 25 per transaction. Currently, it is unclear whether UPI-based cash withdrawals would also be subject to the same restrictions and service fees.
What Do Analysts Say?
According to Bhaskar Chatterjee, VP Products, Ezetap, such a feature will empower the bank customers and make India ready to leverage the benefits of technology.
"We welcome the RBI Governors' recent announcement on the cashless withdrawal at ATMs facilitated by the UPI. Digital adoption across quarters, such as this move, will empower the users and make our nation ready to leverage the benefits of technology," Chatterjee said.
"We envisage this to propel the usage of UPI, as well as, safeguard the users from card-related frauds at the ATMs. The cashless facility would definitely benefit the retail customers and would enable taking a step toward accelerating the pace of digital financial literacy and financial inclusion in the country," he added.