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No PSU banks to raise deposit, withdrawal charges, FinMin clarifies

The Ministry of Finance said, that no PSBs except Bank of Baroda have increased such charges recently

Nirmala Sitharaman, Union Finance Minister Nirmala Sitharaman, Union Finance Minister

The central government has issued a "factual position" in the wake of reports regarding steep increase in service charges by certain public sector banks (PSBs) in the country. The clarification by Ministry of Finance comes close on the heels of Bank of Baroda's announcement that it will be charging customers for deposits and withdrawals above certain limits, starting November 1, 2020.

The ministry, in a statement, said, that no PSBs except Bank of Baroda have increased such charges recently. Bank of Baroda has since informed that in the light of the current COVID-19 related situation, they have decided to withdraw the changes.

In its statement on Tuesday, Ministry of Finance clarified:

For Basic Savings Bank Deposit (BSBD) accounts including Jan Dhan accounts:

No service charge is applicable on the 60.04 crore BSBD accounts, including 41.13 crore Jan Dhan accounts opened by the poor and unbanked segments of society, for the free services prescribed by RBI.

For regular savings accounts, current accounts, cash credit accounts and overdraft accounts:

In this regard, while the charges have not been increased, Bank of Baroda had made certain changes w.e.f. November 1, 2020, with regard to the number of free cash deposits and withdrawals per month. The number of free cash deposits and withdrawals have been reduced from 5 per month to 3 per month, with no change in the charges for transactions in excess of these free transactions.

Although, as per RBI guidelines, all banks, including PSBs, are permitted to levy charges for their services in a fair, transparent and non-discriminatory manner, based upon costs involved, other PSBs have also intimated that they do not propose to raise bank charges in the near future in view of the COVID pandemic.

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