From ATM Fees to FD Benefits: Big Banking Changes Effective May 1, 2025

Starting May 1, 2025, Indian bank customers must prepare for a set of important financial updates that will impact everyday banking and savings. These changes range from increased ATM withdrawal charges to modifications in fixed deposit (FD) and savings interest payouts, as well as a significant consolidation of regional rural banks (RRBs).

Let’s break down the major changes.

ATM Withdrawal Charges to Increase Nationwide

What is Changing from May 1?

The Reserve Bank of India (RBI) has approved a hike in the ATM interchange fee, which is the amount banks pay each other for allowing their ATMs to be used by customers of other banks.

As a result, from May 1, customers will now have to pay Rs 23 per transaction once they exceed their free transaction limit. This marks an increase from the current Rs 21 per transaction.

Free Transaction Limits (No Change)

• Own Bank ATMs: 5 free transactions per month (includes both financial and non-financial).

• Other Bank ATMs:

  • Metro Cities: 3 free transactions/month

  • Non-Metro Areas: 5 free transactions/month

This revision is part of a broader strategy to improve the cost structure of rural banking operations and ATM management efficiency.

RBL Bank to Offer Monthly Interest Payments on Savings Accounts

New Interest Credit Frequency

From May 1, RBL Bank will shift to monthly interest payouts for savings account holders. This replaces the existing system of quarterly interest crediting.

"The Interest will be calculated and accrued daily, based on the end of day balance in your account and will be paid/credited to your account on a monthly basis," read the email from RBL Bank.

Customers will continue to earn an interest rate up to 7%, depending on their account balance. This change offers better liquidity for savers who can now access their interest earnings more frequently.

Shriram Finance Revises FD Interest Rates

In another significant development, Shriram Finance Limited (SFL) has updated its FD rates effective May 1. As per a report by The Economic Times:

• Senior citizens (aged 60+) will now earn an additional 0.50% interest per annum.

• Women depositors will receive an extra 0.10% interest per annum.

This move aims to offer better returns to vulnerable and priority customer segments, especially in a fluctuating interest rate environment.

Government Launches ‘One State-One RRB’ Consolidation Drive

What Is the Scheme About?

In a bid to improve banking efficiency in rural India, the Finance Ministry is rolling out its ‘One State-One RRB’ (Regional Rural Bank) initiative across 11 states. Under this plan:

• 15 existing RRBs will be amalgamated into a single RRB per state.

• This move is set to be implemented from May 1, 2025.

"The Central Government hereby provides for the amalgamation of the said Regional Rural Banks into a single Regional Rural Bank, which shall come into effect on and from the 1st day of May, 2025 with such constitution, property, powers, rights, interests, authorities and privileges; and with such liabilities, duties and obligation," stated the official Finance Ministry notification.

States Covered (Initial Phase)

While the official list of states hasn't been published publicly in detail, the consolidation is expected to improve cost-efficiency, streamline rural banking operations, and enhance customer service across the board.

Conclusion: Prepare for a More Dynamic Banking Experience

These upcoming changes reflect a broader trend in India's financial landscape — where technology, operational restructuring, and customer-centric benefits are being prioritized. Whether it’s the hike in ATM charges, the shift in savings account interest payouts, or the centralisation of rural banks, May 1 marks a significant step in reshaping how citizens interact with the banking ecosystem.