Banking System Changes – Starting June 1, 2025, several crucial banking rules are set to change, directly affecting millions of account holders across India. These regulatory updates, introduced by the Reserve Bank of India (RBI) and commercial banks, are expected to impact day-to-day banking operations, charges, and access to financial services. If you hold a savings account, use ATMs frequently, or rely on auto-debit services, these new rules may influence your financial routine. Let’s break down the upcoming changes and what they mean for you.
1. Increase in ATM Withdrawal Charges After Free Limit
Banks are revising the charges applicable after the permissible number of free ATM withdrawals. While most banks currently allow 3-5 free transactions in metro cities, the new rules will revise the fees beyond this limit.
Key Details:
- Free ATM transactions: No change (remains 3-5/month).
- Charges after free limit: Increased from ₹21 to ₹23 per transaction.
- Applies to: All savings and current account holders.
- Effective from: June 1, 2025.
2. Auto-Debit Rules Tightened for Recurring Payments
Recurring payments like OTT subscriptions, insurance premiums, and loan EMIs that rely on auto-debit mandates will now require an additional authentication layer.
What’s Changing:
- Two-factor authentication required for amounts above ₹5,000.
- Banks will send pre-debit notifications 24 hours in advance.
- Users must authenticate via OTP or app approval.
This change aims to improve transaction security and prevent unauthorized deductions.
3. Bank Locker Agreements Deadline – Mandatory Compliance
As per RBI guidelines, all existing locker holders must sign a revised locker agreement with their banks. This is being enforced for uniformity and customer protection.
Important Highlights:
- Deadline: June 30, 2025.
- Customers failing to sign the new agreement may risk locker suspension.
- The new agreement includes updated safety clauses and compensation norms.
4. Higher Minimum Balance Requirements in Savings Accounts
Some private sector banks have revised their Average Monthly Balance (AMB) requirements for savings accounts. Customers must maintain a higher balance to avoid penalties.
Revised Charges (Sample Bank Data):
| Bank Name | Previous AMB (₹) | New AMB (₹) | Non-maintenance Penalty (₹) |
|---|---|---|---|
| HDFC Bank | 10,000 | 12,000 | Up to 600/month |
| ICICI Bank | 10,000 | 15,000 | Up to 500/month |
| Axis Bank | 12,000 | 15,000 | Up to 600/month |
| Kotak Mahindra | 5,000 | 10,000 | Up to 500/month |
| SBI | 0 (in many cities) | No Change | Nil |
| Bank of Baroda | 2,000–5,000 | 3,000–6,000 | 100–600/month |
| Yes Bank | 10,000 | 12,500 | Up to 750/month |
Customers are advised to check with their specific bank for applicable limits.
5. UPI Transaction Limits and Charges – New Caps Imposed
The National Payments Corporation of India (NPCI) is introducing transaction caps on UPI transfers for merchant payments using wallets like PhonePe, Paytm, and Google Pay.
New UPI Guidelines:
- Transaction cap: ₹1 lakh/day (remains unchanged for person-to-person).
- Wallet-to-UPI merchant payment via PPI: New limit of ₹2,000 per transaction.
- Banks may charge a small fee (₹0.50–₹1) per merchant transaction over ₹2,000.
This is expected to streamline UPI use across platforms and reduce system load.
Summary Table of All Major Changes Effective June 1
| Change Type | Old Rule/Status | New Rule from June 1 |
|---|---|---|
| ATM Transaction Fee | ₹21/transaction after free limit | ₹23/transaction after free limit |
| Auto-Debit | Simple recurring debit | Mandatory OTP for >₹5,000 transactions |
| Bank Locker Agreement | Existing agreements | Mandatory revised agreement |
| Savings Account AMB | ₹5,000–₹10,000 (varies) | ₹10,000–₹15,000 (depending on bank) |
| UPI Merchant Transactions | No specific cap | ₹2,000 per wallet-merchant transaction |
How These Banking Changes Will Affect You
These regulatory changes may seem minor individually, but their collective impact could be significant for regular banking users. Here’s how:
- Frequent ATM users will now pay more if they exceed free limits.
- Those using auto-debit must approve large recurring payments manually.
- Locker users need to act quickly to stay compliant.
- Customers with low balances may face higher penalties.
- Merchants using wallet-based UPI must comply with new caps and charges.
Being proactive and staying informed is key to avoiding surprise fees and service disruptions.
What You Should Do Now
Here are some immediate steps account holders should take:
- Check ATM usage and avoid excess withdrawals.
- Review recurring payments and ensure contact details are updated for OTPs.
- Visit your bank branch to sign the new locker agreement.
- Maintain required AMB to avoid penalties.
- Use UPI carefully for large merchant payments and confirm any fee applicability.
As banking systems evolve, staying informed about upcoming changes ensures you manage your finances smoothly. From ATM fees to UPI limits and locker safety, these June 1 updates demand timely attention. Take action now to stay compliant and avoid unexpected charges or disruptions. Always reach out to your bank’s official support for personalized guidance or clarifications.
FAQs on Banking Rule Changes Effective June 1
1. Will I be charged for ATM withdrawals even if I stay within the free limit?
No, you will not be charged for the number of free transactions allowed by your bank (usually 3–5 per month). Charges apply only after exceeding this limit.
2. What if I fail to approve an auto-debit transaction via OTP?
The transaction will not be processed unless approved. You may miss a payment or service renewal, so ensure timely approval.
3. Is the locker agreement update applicable to all bank customers?
Yes, all existing locker holders must sign the revised agreement by June 30, 2025, regardless of the bank.
4. Are all banks increasing their minimum balance requirements?
Not all. Some public sector banks like SBI are not changing their AMB. However, many private banks are revising theirs upward.
5. Will UPI person-to-person transactions be affected by the new rules?
No, person-to-person UPI transfers remain unchanged. The new cap applies only to merchant payments through wallets and PPI-linked UPI.