Starting October 1, 2026, State Bank of India will reduce the monthly free transaction limit at other banks' ATMs for Salary Package Account holders from 10 to 5. This update is part of the bank's effort to encourage the use of its own ATM network, though transaction fees for exceeding the limit remain unchanged.
State Bank of India (SBI) has updated its policy for Salary Package Account holders regarding ATM and Automated Deposit cum Withdrawal Machine (ADWM) usage at other banks. Effective October 1, 2026, the number of free monthly transactions at non-SBI machines will drop to five, down from the previous limit of 10. This change applies to both financial transactions, such as cash withdrawals, and non-financial ones, like balance enquiries, combined into a single monthly count.
Importantly, this new limit applies only to third-party bank ATMs. Usage at SBI’s own network of ATMs remains unlimited and free for these account holders. By narrowing the free usage allowance at external machines, the bank is incentivizing customers to utilize its own vast ATM infrastructure instead of relying on competitors.
The fees charged after a customer exhausts their free limit remain exactly the same. Exceeding the allowance will continue to cost ₹23 plus GST for cash withdrawals and ₹11 plus GST for non-financial transactions. The policy update is not a hike in service charges, but rather a reduction in the free allowance window for using competing banks' hardware.
For investors, this operational move highlights the bank's focus on cost management and infrastructure optimization. Maintaining ATMs incurs significant operational and security costs. By directing more salary account holders toward the bank's own ATMs, SBI can better manage the interchange fees and operational costs associated with maintaining third-party inter-bank ATM arrangements. While this is a small adjustment, it aligns with a broader industry trend where banks periodically review service fee structures to optimize internal resource usage.
While the financial impact of this specific change on the bank's bottom line is minor, the risk for the bank lies in customer experience. If customers face difficulty in finding SBI ATMs in specific areas and are forced to use other banks, they may feel the pinch of the reduced limits. However, because salary accounts are generally considered 'sticky' relationships, the risk of significant account churn is typically low. The bank's strong digital banking adoption also serves as a counterbalance, as many customers are increasingly moving toward digital payments over physical cash withdrawals.
Investors may monitor how such service adjustments reflect in the bank's cost-to-income ratios and whether the trend toward digital-first banking continues to reduce the overall reliance on physical ATM networks in the coming quarters.