Reserve Bank of India (RBI), the central bank of the country, has directed the banks to extend the facility of cash withdrawals from merchant establishments.
The move comes after the regulator noticed that the previously announced instructions were not adequately implemented by the banks.
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Earlier, RBI instructed the banks to enable cash withdrawals at PoS devices by using debit cards and open-loop prepaid cards.
The directives allowed cash withdrawal of up to INR1000 per day in Tier I and II centres. In Tier III to VI centres, the limit was INR2,000 per day.
The banks are allowed to levy transaction charge of up to 1% on such PoS cash withdrawals.
However, in a circular, RBI noted that instructions were not ‘implemented in letter and spirit’.
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By GlobalData“The instructions issued in the above circulars are, therefore, reiterated with a view to provide for cash withdrawals at PoS by card-holders. To this end, banks may extend the facility of withdrawal of cash at any merchant establishment designated by them after a due diligence process,” the statement added.
The central bank also advised banks to submit data on cash withdrawals at PoS devices to on a quarterly basis. The directive is set to become effective from the quarter ending 30 September 2019.
Earlier this month, RBI issued another circular to prevent the banks from counting non-cash withdrawal transactions at ATM as free ATM transactions, Livemint reported.
Non-cash withdrawal transactions include balance enquiry, PIN change and cheque book request among others.
