In a customer-focused move, the Reserve Bank of India (RBI) has permitted cash withdrawals using debit card at point of sale (POS) terminals with the merchant establishments.

Accordingly, customers can withdraw up to Rs.1000 on per day, at merchant establishments, irrespective of whether they make a purchase at the given point or not.

If the customer makes purchases along with cash withdrawal, a separate receipt will be generated indicating the amount withdrawn.

Considering the fact that presently customers can withdraw cash only from ATMs, the bank has described the move as ‘a further step towards enhancing the customer convenience in using the plastic money...'

According to RBI, the number of ATMs and POS terminals in the country as on May 31, 2009, stood at 44,857 and 4, 70,237 respectively.

The regulator also indicated increasing use of debit cards by the customers at Point-of-Sale (POS) terminals, with use of credit cards on downside.

In recent past, there have been increasing cases of ATM failing to dispense cash.

The move has been welcomed by bankers - R P Sinha, deputy managing director, Aspy Engineer, VP, alternative channels, Axis Bank, said, "It is a good step as PoS terminals are much more easily available than ATMs."

The circular has asked the banks to seek approval from their respective Board of directors, following which they must seek one-time permission from Department of Banking Operations and Development, RBI under Section 23 of the Banking Regulation Act, 1949 for availing the facility.

The circular also states, "This facility may be made available at any merchant establishment designated by the bank after a process of due diligence."

The participating banks have been also asked to put a customer redressal mechanism in place. Any complaints with regards the facility would fall in ambit of the Banking Ombudsman Scheme.

The circular however gives no clue on the service/withdrawal charges (if any) levied on POS cash withdrawals.