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Soon, go to a shop to draw money
Debit card holders will soon be able to get cash up to Rs 1,000 directly from merchant establishments.

In a bid to give a thrust to financial inclusion and also enhance customer convenience, the Reserve Bank of India on Wednesday said it will allow cash withdrawal up to Rs 1,000 a day via debit cards at point-of-sale terminals at merchant establishments.

The RBI move to permit debit card holders to withdraw money at point of sale (POS) terminals stems from the fact that the number of these terminals at different merchant establishments has been steadily increasing. As on May 31, 2009, there were 4.70 lakh POS terminals in the country as against 44,857 ATMs.

Currently, cash withdrawal facility using plastic cards is available only at ATMs.

The latest RBI data show the number of outstanding debit and credit cards in the country was at 28.35 crore and 4.84 crore respectively. “Once the cash withdrawal facility at POS terminals is rolled out, bank customers need not depend on either branches or ATMs for drawing small amounts. They can just walk into a neighbourhood merchant establishment, swipe their card and take cash from the merchant. This is not only a customer-centric move but will also promote financial inclusion,” said Mr R.P. Sinha, Deputy Managing Director, State Bank of India.

SBI is considering setting up around two lakh POS terminals in the next one year or so, while Union Bank of India has decided to set up one lakh POS terminals by March 2010.
Cheaper alternative

“In up-country locations, setting up ATMs may not always be viable. So, a POS terminal at, say a grocery or a jewellery shop will be a cheaper alternative for banks. Once cash withdrawal at POS terminals is enabled, customers in rural areas need not travel to to withdraw money,” said Mr Pravin Bansal, Deputy General Manager, Union Bank of India.

According to bankers, the debit card holder may be charged Rs 20 per withdrawal transaction and the same would be split among service providers (VISA/ MasterCard/ American Express), the bank and the merchant establishment.

The central bank said the cash withdrawal facility at POS terminals should be available irrespective of whether the debit card holder makes a purchase or not. Banks offering this facility have to put in place a proper customer grievance redressal mechanism.

The latest RBI move may prompt banks and service providers to step up establishment of POS terminals at merchant locations.

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