Many Indian banks are in the news again for levying hefty charges for non-maintenance of minimum average balance (MAB) in savings accounts. And the State Bank of India (SBI) tops the list for collecting a whopping Rs 1,771 crore during April to November 2017 as charges for the same. Interestingly, the amount is said to be more than SBI’s July-September quarter net profit of Rs 1,581.55 crore and nearly half of the Rs 3,586 crore it earned as net profit during April to September last year.
Like SBI, many other banks have also collected hefty sums as charges for non-maintenance of MAB. Punjab National Bank, for example, has collected Rs 97.34 crore, while Central Bank of India has collected Rs 68.67 crore as charges for non non-maintenance of minimum account balance.
Sadly, non-maintenance of minimum average balance in the savings bank accounts is not the only thing which attracts charges. There are n number of other things for which service charges are levied by banks, which range from cash and digital transactions to withdrawal from ATMs beyond the free limit to SMS alert charges.
Banks argue that they have to levy various service charges on services and other activities to recover the costs they incur for running their day-to-day operations and maintaining branch expenses. SBI, for example, has argued that on an average balance of Rs 3,000 in metro cities, it earns Rs 6 only per month whereas for a minimum balance of Rs 1000 in rural areas, it earns Rs 2 per month, which is meagre when compared to the services offered and corresponding costs incurred by the bank (like free cheque books, 8 free ATM transactions, and free branch transactions, among others).
This is also true to some extent. Still, there are many services for which customers are overcharged, especially by private banks. It is, therefore, in your own interest to be aware about all such charges and, if not satisfied, then move to some other bank whose charges are genuine or less than competitors. However, the quality of services they offer should also be taken into account while doing that.
|SCHEDULE OF CHARGES LEVIED BY BANKS|
|Monthly Average balance non-maintenance charges||Cash transaction charges per transaction at branches
(beyond free limit)
|Charges on ATM transactions (beyond free limit)||NEFT fees||RTGS fees|
|Axis Bank (Easy Access Savings A/c)||Rs 100-500||Rs 5 per Rs 1000 or
Rs 150 whichever is higher
|Financial transactions: Rs 20 per transactionNon-financial transactions: Rs 8.5 per transaction||Rs 2.5–25 per transaction||Rs 25–50 per transaction|
|HDFC Bank||Rs 150-600||Rs 150 per transaction from 5th transactionValue of transactions (all branches): Rs 5 per thousand or Rs 150, whichever is higher beyond free limit||Cash Withdrawal: Rs 20 per transactionNon-Financial Transaction: Rs. 8.5 per transaction||Rs 2.5–25 per transaction (Online transaction free)||Rs 25–50 per transaction (Online transaction free)|
|ICICI Bank||Upto Rs 600||At all branches: Rs 5 per Rs 1000 or Rs 150, whichever is higher beyond free limit||Financial transactions: Rs 20 per transactionNon-financial transactions: Rs 8.5 per transaction||Rs 2.5–25 per transaction||Rs 25–50 per transaction|
|State Bank of India (Regular SB A/c)||Rs 20-50||Rs 50 per transaction||Financial transactions
Bank’s own ATMs: Rs 10 per transactionOther banks’ ATMs: Rs 20 per transactionNon-financial transactions
Bank’s own ATMs: Rs 5 per transactionOther banks’ ATMs: Rs 8 per transaction
|Rs 1-5 through mobile and net bankingRs 2.5-25 per transaction at branches||Rs 5-10 through mobile and net bankingRs 25–50 per transaction at branches|
|Upto Rs 500||At all branches: Rs 3 per Rs 1000 or Rs 50, whichever is higher beyond free limit||NIL||Rs 2.5–25 per transactionFree through Net Banking/Mobile Banking||Rs 25–50 per transactionFree through Net Banking/Mobile Banking|
|Rs 350-450||At all branches: Rs 3.5 per Rs 1000 or Rs 150, whichever is higher beyond free limit||NIL at own bank ATMsOther bank ATMs : Rs 20 per transaction for financial transactions
Rs 8.5 per transaction for non-financial transactions
|NIL through internet & mobile bankingRs 2.5-25 per transaction through branch||NIL through internet & mobile bankingRs 25-50 per transaction through branch|
Financial experts say that banks, like any other business, do need to charge for services rendered if they are to stay profitable and meet investor expectations of return on capital employed. Depositors, loaners and other service users would need to get accustomed to paying charges for services rendered by their bankers.
“This, however, does not mean that there would not be cases where banks would be overcharging for their services or simply not delivering despite charging. Competition is the best way of safeguarding yourself from any malpractice by any banker. By all means do maintain relations with more than one banker. Compare their costs and service standards to ensure that you get the best possible banking solution. That is the advantage of having multiple banks and freedom to chose the one that best serves your needs. Before opening any account or taking any loan or signing any other service agreement do read the fine print and understand all the terms and conditions,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.
You can always take the help of your financial advisor or a chartered accountant, but do understand all the features of the service arrangement you are getting into. “Competitive banking landscape ensures that banking is largely done at reasonable costs to the customers, but at the same time each one of us should protect and guard ourselves against overcharging and other malpractices,” adds Kapur.