Committee may be formed to scrutinize bank charges

Reserve Bank of India may appoint a committee to examine the rise in bank charges in the wake of high court judgments and spate of complaints in Parliament.

Around 21 PSU and 3 private banks have collected about Rs 5,000 crore in 2017-18 from consumers for not maintaining the minimum balance in their accounts, according to data released by finance ministry.

State Bank of India earned Rs 2,433 crore, while HDFC Bank earned around Rs 590 crore as penalty. The SBI’s minimum average balance requirement for its customers in metro cities is Rs 3,000, and HDFC Bank has a variable average balance requirement.

Recently the Chhattisgarh high court had directed banks to ensure the charges levied on multiple transactions and other services be “uniform and reasonable”.

Finance Ministry officials said the problem had arisen after the RBI stopped setting limits to the charges that could be levied on various counts, and banks started fixing such charges “arbitrarily”.

A petition filed to RBI governor Urjit Patel has cited “unfair treatment that bank customers suffer in the form of frequent, arbitrary and one-sided increase in banking charges, or the refusal of banks to automatically pass on contractual benefits such as lower interest to those with floating rate home loans, or the rampant mis-selling of third-party products such as insurance”.

The petition to Patel sought the “frequent increase in charges and billing customers by stealth through opt-out clauses that are not noticeable must be stopped immediately”.

Officials admitted receiving complaints about banks, forcing one-sided loan and other agreements with the details buried in the fineprint. “These and a lack of following correct procedure often results in the consumer losing money,” they said.

Banks often do not pass on lower borrowing costs or post the interest receivable on deposits to the survivors of a joint fixed deposit, resulting in delays and harassment. “Both the banking ombudsman as well as the finance ministry are burdened with large numbers of complaints, often forwarded by Parliamentarians in this regard,” said officials.

Another matter of concern are the charges levied on customers who go digital. “Bank charges whether on cash usage or on electronic transfers have been going up as has the GST on these. Cumulatively, the impact on a consumer has gone up … the ministry has been asked to look into this and we are thinking of ways to lower the burden on consumers,” said officials.

Led by the SBI, most banks are charging a transaction fee on cash withdrawals either from ATMs or bank counters beyond the first four withdrawals in a month. At the same time, charges on electronic transfers have been rising after being capped or reduced post demonetisation two years back.