According to the RBI notification released on 27 May 2011, all the failed ATM transactions will cost banks a penalty of 100 Rupees per day if they fail to re-credit the customer’s account within 7 working days of receipt of the complaint. This directive came into effect on 1 July 2011.
According to the instructions, any customer is entitled to receive such compensation for the delay, only if a claim is lodged with the issuing bank within 30 days of the date of the transaction. All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM system provider only. No bilateral settlement arrangement outside the dispute resolution mechanism available with the system provider is permissible. The directive is issued under section 18 of the Payment and Settlement Systems Act 2007.
So from the next time when you go to an ATM and the transaction fails but a message regarding deduction of the same is received by you, call the customer care of your respective bank and file a complaint about the same within 30 days, the bank will re-credit your account within 7 working days of the complaint and if they fail to do so, then they will have to give 100 Rupees per day as compensation for the delay made.
Read the original notification here.