If you have ever gone through your Bank statement in any detail, you would have realised how often certain amounts – seemingly small – have been deducted under the narration ‘Bank charges’. Sometimes they do not even show up under that name, but come under an incomprehensible series of letters and numbers that make even less sense.
By whatever name called, “Bank charges” are an inevitable part of life for those of us who maintain and operate Bank accounts. In fact, if you do not operate your account for a long time, you will be charged to activate it again. And if you do not keep enough money in the bank, you will be charged as well – yes, you will be charged money for not having enough money. Iniquitous as this sounds, there is a sound business logic behind some of these charges at least. There is a cost to maintaining the records for any Bank account, as well as for issuing collaterals like Debit cards, Credit cards, cheque books and so on. Charging a nominal amount to cover these costs sounds reasonable and for the most part, we are willing to pay for this as well.
Of late however, there has been a more disturbing trend, in the form of ‘transaction charges’. These are charges for depositing cheques over a counter, for depositing cash into an account, for operating an account from a branch other than the one where it was opened, for accessing Automatic Teller Machines (‘ATM’) and so on. Some of these charges date back a long way, some were removed and then re-imposed, while others are a new phenomenon.
The charges on remittances (transfer of funds from one city to another) are not only high but also unjustifiable. State Bank of India charges over Rs. 50/- for depositing cash into an account outside your home city, so whether you deposit Rs. 100 or Rs, 100,000, expect to see a corresponding debit of Rs. 57/- in your account immediately. ICICI does not debit the account-holder, but deducts an amount from the amount deposited at the time of transaction itself. Similarly, other banks, both nationalised and private, charge considerable amounts.
These charges are not only excessive, but also illogical. As has been pointed out even by the Reserve Bank of India’s Committee on Customer Service, in a core-banking environment, where all branches of a bank are linked electronically through a central server, there is no logic to having a charge for a deposit at any branch. Similarly, when the Cheque Truncation System – 2010 was introduced and implemented (From January 2014), it was clear that there is no longer a need for physical movement of cheque instruments between cities.
In such circumstances, the charges collected by Banks seem to be less legitimate recovery of costs and more an attempt to increase revenues. Indeed, in an environment where a sluggish economy has meant limited credit growth, and loans given in the past are rapidly turning into Non-Performing Assets, perhaps the only way for Banks to reach their ambitious revenue targets has been to target the ordinary retail customer by insidious charges like these.
In doing so, perhaps they are forgetting the social need that led to the development of Banking, particularly of the remittance business, as well as the concessions and encouragement they have received from successive governments. For when they charge for inter-city deposits and withdrawals, they are taking money away from the student studying in a faraway city who needs the money to pay his fees, from the parents of the day-labourer sending money to his wife back home, from the young professional sending money for his parents’ monthly expenses. All this, while those who have defaulted on their loans, leading the Banks into taking such steps in the first place, sip their champagne in London, South Mumbai and Lutyens’ Delhi.
It is time then, for all of us who use Banks services to become more vocal about this matter. Small as these sums may appear to some of us, for others they are significant and eat into an already meagre earning at a time when rising inflation is making money worth less.