"The charge conforms with current policies and regulations," a People's Bank of China spokesman said yesterday via its website.

He cited a regulation promulgated last year that allowed banks to make their own decision about the fee.

But he stressed the regulation also stated that the charge for each transaction should not be more than 2 yuan (24 US cents).

The central bank's announcement about the fee was triggered by a public debate over the legitimacy of the charge.

The central bank spokesman said reasonable charges for services on ATMs would encourage customers to use banking cards more often to buy items as there was no surcharge for the transaction.

This in turn would help the banks reduce their costs by cutting the number of small-amount cash withdrawals.

The charge would also help banks increase their input in the development of their ATM system, the spokesman said.

Since June, officials with the central bank have commented on similar issues, such as the introduction of charges on existing services, which have divided the banks and their customers.

Two commercial banks in Guangdong set a threshold balance of 2,000 yuan (US$240) for their customers in May.

An official with the Industrial and Commercial Bank of China (ICBC) said at the time it planned to introduce fees to customers with a balance of less than 100 yuan (US$12).

The actions of both Guangdong banks and the push by the ICBC sparked furious reactions from the public, which accused them of discriminating against people on low incomes.

The central bank was quick to declare that charging customers for the amount of money they had in their accounts was against the Commercial Bank Law.

It was enough to stop the Guangdong-based banks, and the central bank then said it would work out a fee for banks' intermediary services.

That too prompted discussion and constant queries from the media.

The fee has not yet been introduced.

(China Daily August 13, 2002)