Banks levied Rs 35,587 crore as service charge, penalty since 2018: MoS Finance in Rajya Sabha

Major public and private sector banks levied Rs 35,587 crore from customers in the five years from 2018 for facilities such as SMS and additional ATM transactions as well as penalty for not maintaining the minimum balance.

Of this, the largest amount of Rs 21,044.04 crore was levied by major commercial banks as penal charges on customers for non-maintenance of minimum balance since 2018. 

The information was shared by Union Minister of State of Finance Bhagwat Karad in the Rajya Sabha on Tuesday in response to a question on high service charges levied by scheduled commercial banks.

Further, these lenders including public sector banks and private sector Axis Bank, HDFC Bank, IndusInd Bank, ICICI Bank and IDBI Bank levied an Rs 8,289.32 crore for additional ATM transactions and another Rs 6,254.32 crore for providing SMS services since 2018.

“…in order to regulate the charges levied by the banks, Reserve Bank of India has issued Master Circular on ‘Customer Service in Banks’ dated July 1, 2015 which provides that banks are permitted to fix penal charges regarding non-maintenance of minimum balance in savings account, as per their Board approved policy, while ensuring that all such penal charges are reasonable and not out of line with the average cost of providing the services,” Karad said.

The RBI through the circular also advised banks to ensure reasonableness and equity in the charges for sending SMS alerts to customers and to leverage the technology available with them and the telecom service providers to ensure that such charges are levied on all customers on actual usage basis, he further said.

According to the RBI circular of June 10, 2021, bank customers are eligible for five free transactions every month from their own bank ATMs. They are also eligible for fixed number of free transactions from other bank ATMs, which translates to three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, charges are levied for each ATM transactions at a maximum of Rs 21 per transaction.

However, to ensure availability of affordable banking services to the poorest sections, basic minimum facilities are provided under Basic Savings Bank Deposit Account, including accounts opened under Pradhan Mantri Jan Dhan Yojana free of charge and without any requirement for maintaining minimum balance in the account.