We all trust our bankers
blindly and a lot of us are totally unaware of the charges that bank levy and
have never checked whether their bank announces them transparently. They always
ride on consumer trust, apathy and ignorance. Unfortunately, a large discerning
group is aware about the many charges and they entrusted bank that alert them
transparently. Ironically, banks have not been taking their responsibility and
hence, do not inform the customers accordingly. Worse, these arbitrary and
unexplained charges are introduced after luring you with the promise of several
free frills and locking up the relationship through salary account, credit cards,
loan installments, systematic investment plans and ECS for payment of dividends
or utility bills. Read also: Grievances of Bank Depositors
Let us now examine each element of these high service or
convenience charges in the eyes of banking system.
SMS
Alerts Charges
First, every bank lured people
to sign up for the SMS alerts as a security measure and saying it was free. If
banks are expected to provide this service free, what explains the new charges?
Well, banks are now clubbing it with alerts for every debit and credit in the
account to levy charges. Although the paltry sum levied is approximately Rs5 a
month or Rs60 per annum, most people feel cheated by these charges that they
have never opted for an SMS alert.
One of mine, clients who told
me that he has never opted for an SMS alert but noticed these charges in his
passbook. When he asked for it to be cancelled and the charges reversed, his
banker used the opportunity to impress on customer that it is a mere Rs5 every
month. This may seem like a small
amount, but a rupee saved is a rupee earned. The charges you pay can amount to
a lot over the years, especially if you have multiple accounts you don’t use
often. Being
an alert customer, it is believed that it is only a matter of time before banks
raise these charges. After all, most banks have substantially hiked debit card
charges recently. Ultimately, he was asked to make a formal representation to the
bank to get deactivate the service and reversing the charges.
Minimum
Balance Charges
Most nationalized banks require
average minimum balance in your saving account is between Rs500 to Rs1,000 and
private and foreign banks require the same of Rs5,000 and above. Worse, banks
are also notorious for raising the minimum balance requirements without
bothering to inform customers. Each bank has its own set of rules for
calculating the average minimum balance. These charges are levied to the tune
of Rs100 to Rs1,000, some do it on monthly basis and others on a quarterly basis.
Most often, their calculation is tailored to the bank’s best interest.
The minimum balance rule is
significant for those who have salary accounts that are negotiated at a zero
balance requirement and decide to switch jobs. As they are no longer an employee
of the concerned company, all the normal costs kick-in. Also, there is no alert
or intimation when the average balance sinks below the threshold limit of
minimum requirement. It is up to you to be aware of it, reversing the charges
if you complain and threaten to escalate the matter.
ATM
and Debit Card Charges
Most banks proclaim free ATM
and debit cards at the time of opening new accounts; begin to charge an annual
fee from the second year. These annual charges will reflect every year to the
tune of Rs100 to 250 plus tax as debit card charges. Those who are lured by the high interest rate
of 7% on saving accounts, their charges are higher than those of other banks.
Add-on cards have also attracted a separate additional fee for the same.
ATM
Transaction Charges
You must be aware that as per RBI guidelines, all debit cards
issued by banks in India can be used at any bank ATM within India. Now if you
are a saving bank account holder, then you can do five transactions free of
cost at other bank ATMs in a month. This is inclusive of financial and
non-financial transactions. From the sixth transaction onwards, you will be
charged a transaction fee by your bank.
The service charges ranging from Rs20 upwards are levied sixth
transaction onwards at other ATMs varies from bank to bank. However, there are some
banks that they don’t charge anything for any number of transactions even if
you are not their customer.
Cheque
Transactions Charges
Cheques
returned without being paid, whether deposited or issued by you will entail a
cost. Banks charge anywhere between Rs50 to Rs500+ for returned cheques. So it
is worth the effort to sign consistently, mention correct dates, maintain
sufficient balance, and ask persons to whom you give post dated cheques not to
deposit them before the due dates. Unfortunately, there is little you can do if
a cheque you receive returns unpaid. Similarly, an instruction to the bank to
not pay a cheque after issuing it will cost you.
Every
bank provides accountholders with a chequebook with a certain number of leaves
free every quarter. Requesting chequebooks beyond the allowed quota would cost
you to the tune of Re1 per leaf to Rs10 per leaf.
Account
Closure Charges
A
significant number of customers are unaware about the closure of their accounts
attract account closing charges, especially when the account is closed within a
year. Since the process of opening an account and completing know your customer
(KYC) formalities is so tedious, being loyal customers must not be closed their
account within a year. However, a big irritant to customers is that banks make
it difficult to close accounts.
Dormant
Account Charges
Most customers have multiple saving accounts; it may so
happen that they may completely forget an account for few years until they
found their old ATM or cheques. If there is no transaction in account for two
years, other than interest credit in saving accounts, the bank will declare it
as dormant or inoperative account.
Once, the account turns dormant, it gets deactivated, hence you cannot
operate account like ATM withdrawal, no cheque clearance etc. However, there is
no formal procedure to get activate your account and may vary with banks, one
can visit a bank and submit a written application with valid reason for not
using account. While, there are no charges for reactivation, one has to make
debit/credit transaction in the account. Worse, if you left the account dormant
and the bank levies charges to this account by inadvertently, it could get
reported to the Credit Bureau as a default/ outstanding and needlessly affect
your credit record.
Other Common Service
Charges
Besides the above, a slew of charges for every additional service they
offer such as copies of duplicate statements or passbooks charges, cash deposit
and handling charges, NEFT charges and a duplicate PIN number for your ATM card
and even electronic banking passwords are charged.
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