Financial Accountability Network India has welcomed the Reserve Bank of India’s decision to remove charges for the RTGS and NEFT transactions and to form a committee under the chairmanship of Chief Executive Officer, Indian Banks’ Association, to “examine the entire gamut of ATM charges and fees”.
“As a group of civil societies, unions, NGOs and peoples movements, it has been our longstanding demand from the RBI and the government that it look into the matter of bank charges and take immediate actions to remove all the charges,” said the network in a statement.
While the RBI’s decision on removal of the charges on NEFT and RTGS and setting up a committee has been appreciated by civil society groups, it is important to note that the RBI has so far stated that all charges levied by the banks are at the discretion of respective banks and that the RBI will not step in across the spectrum. Therefore, the latest announcement is a welcome step and the central bank has finally recognised the problem of charges levied by banks for providing various services.
The Financial Accountability Network has demanded that the committee that is being set up under the chairmanship of Chief Executive Officer, Indian Banks’ Association, will engage with all the stakeholders, including the affected public, and remove the cap on free transactions from ATMs.
The charges for NEFT and RTGS varies from Rs 1 to Rs 5 and Rs 5 to Rs 50 (GST excluded), respectively. These are negligible if one compares them with other charges, like a penalty for not maintaining the minimum balance, which varies from Rs 10 to Rs 600, and charges on cash transactions, ranging from Rs 10 to Rs 160, done at various bank branches
The current decision to ‘boost digitalisation’ is yet another indicator that the RBI is interested in promoting banking among only a particular class (tech-savvy, urban, middle and upper-middle class) while ignoring the interests of the weaker sections of society, which are affected most due to higher charges on basic services, the network has claimed.
For instance, the charges for NEFT and RTGS varies from Rs 1 to Rs 5 and Rs 5 to Rs 50 (GST excluded), respectively. These are negligible if one compares them with other charges, like a penalty for not maintaining the minimum balance, which varies from Rs 10 to Rs 600, and charges on cash transactions, ranging from Rs 10 to Rs 160, done at various bank branches.
Recently, a pilot study conducted by RBI in Mumbai revealed that over 25 per cent of the customers are unhappy with the charges such as penalty on non-maintenance of minimum balance, cash deposit charges at home and non-home branches, cheque return charges (deposited by the customers) and for signature verification. These charges have also become an impediment in implementing various welfare schemes being run by the government. Recently, the Maharashtra government has blamed banks for applying various charges on beneficiaries’ accounts, which is making it difficult for beneficiaries to access the money.
Banks are increasing charges levied for providing for banking services for common people to compensate for their losses created by massive non-performing assets, thus hurting mostly the weaker sections of society, the network has said. They are allowing free transactions for online users, again neglecting people still dependent on brick and mortar bank branches for their banking activities.
The campaign run by the Financial Accountability Network, ‘No Bank Charges’ has led to people across India sending postcards and emails to the RBI governor, finance minister, and the prime minister, demanding that all bank charges be scrapped and the poor and weaker sections should neither be exploited, nor denied banking services
Moreover, this development has to be seen in the broader context of banking reforms that the current government is planning. The push for digitalisation and putting charges on transactions done at banks will push the people away from brick and mortar banks and will make way for reducing the bank branches, the merger of banks, and consequently reducing the number of bank employees. This will further add to the huge unemployment stalking India in current times, believe economists.
The campaign run by the Financial Accountability Network, ‘No Bank Charges’ has led to people across India sending postcards and emails to the RBI governor, finance minister, and the prime minister, demanding that all bank charges be scrapped and the poor and weaker sections should neither be exploited, nor denied banking services.
The campaign has made the following demands:
- The committee on ATM charges should be open for consultations and should remove the cap on transactions as well as the charges.
- RBI does not deal with the charges in piecemeal but must scrap all bank charges.
- On June 11, RBI announced the constitution of the committee to review the ATM interchange fees structure under the chairmanship of VG Kannan, Chief Executive, Indian Banks Association. From cash crunch in ATMs, shutting down of ATMs, increased charges that directly affect the customers, to increased service charges from the ATM companies that had put pressure on the banks, there are multiple issues concerning ATMs. The committee is expected to place its report within two months of its first sitting. The committee should include all stakeholders including the public who use the ATMs and are burdened by the transaction charges. The committee should remove all charges levied on the customers for using ATM services.
The Financial Accountability Network India (FAN India) comprises a group of civil society organistions, unions, NGOs and people’s movements.
The article, first published on the Hardnews magazine, can be accessed here.