The finance ministry on Tuesday clarified that no service charge will be applicable on bank services for Basic Savings Bank Deposit (BSBD) accounts including Jan Dhan accounts that the Reserve Bank of India (RBI) has prescribed as free. The "factual position" came after several media reports alluded to steep increase in service charges by certain Public Sector Banks (PSBs).
"No service charge is applicable on the 60.04 crore accounts opened by the poor and unbanked segments of society, for the free services prescribed by RBI," the Finance Ministry's statement says.
So far as Regular Savings accounts, Current Accounts, Cash credit accounts & Overdraft accounts, the charges will not be revised upwards in the "near future". While the 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with regard to the number of free cash deposits and withdrawals per month, it has informed the Finance Ministry to have withdrawn such changes.
"Bank of Baroda has since informed that in light of the current COVID related situation, they have decided to withdraw the changes. Further, no other PSB has increased such charges recently," says the statement.
The statement further says that all PSBs have confirmed that they will not raise charges in near future . "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."
Does it mean all withdrawals and deposits may get chargeable in the distant future? If industry experts are to be believed, while not all transactions will get payable, most banks may revise downwards the limits for free withdrawals and deposits. The banks already levy Rs 50-150 per transaction on high-value transactions, although home branches do have higher cut-off limits. Going forward, such relaxations are expected to phase off.
"Banks are free to set charges for the services they provide. However, charging all deposits and withdrawals goes against the grain and will prove detrimental to both banks and depositors, so the chances that this would happen is remote. Nevertheless, banks are looking to reduce the prevalence of cash transactions and make operations digital as this would help them offer services online and maintain their online presence even at times when physical presence isn't possible," says Adil Shetty, CEO, BankBazaar.com.
"Going forward, while digital transactions such as net banking and UPI payments, as well as debit and credit card payments for most parts, will continue to remain free, there may be a premium on cash deposits and withdrawals as banks look to make operations leaner," he adds.