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The Reserve Bank of India has asked banks to extend the facility of cash withdrawal through debit cards at more merchant establishments. RBI has been urging banks to facilitate such cash withdrawal facility at PoS (point of sale) devices enabled for all debit cards and open-loop prepaid cards issued by them.

In a circular, issued on Thursday, the RBI said it has come to its notice that the instructions have not been implemented in "letter and spirit". The central bank has reiterated the instructions with a view to provide for cash withdrawals at PoS by card-holders.

According to RBI norms, the limit on cash withdrawal through debit cards at PoS devices is up to 1,000 per day in Tier-I and II centres and 2,000 per day in Tier-III to VI centres.

"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 RBI said.

Customer charges, if any, on cash withdrawals through debit cards from PoS devices should not be more than 1% of the transaction amount.

The RBI has asked banks to submit data on cash withdrawals at PoS devices to Department of Payment and Settlement Systems, Mumbai, on quarterly basis within 15 days of the end of quarter.

In it 2015 circular, RBI had asked banks to provide such cash withdrawal facility subject to following conditions:

1) The facility is made available at merchant establishments designated by the bank after a process of due diligence. Such merchant establishments may be advised to clearly indicate / display the availability of this facility along with the charges, if any, payable by the customer.

2) The facility is available irrespective of whether the card holder makes a purchase or not. In case the facility is availed along with the purchase of merchandise, the receipt generated shall separately indicate the amount of cash withdrawn.

3) Banks offering this facility shall have an effective customer redressal mechanism. Complaints in this regard will fall within the ambit of the Banking Ombudsman Scheme.

Earlier this month, RBI said that banks also can't include non-cash withdrawal transactions like balance enquiry, cheque book request, payment of taxes and funds transfer under free ATM transactions.

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