July 11, 2020, Delhi: Financial Accountability Network India condemns the banks for resuming the bank charges which were withheld for three months by Finance Minister. While all the banks resumed the ATM charges and penalty for not maintaining the minimum balance from the month of July, Bank of Maharashtra increased the existing charges by more than double and even introduced new charges on cash transactions from bank branches.
On 24th March 2020, Finance Minister Ms Nirmala Sitharaman announced that banks will not penalise the account holders for not keeping minimum balance in their accounts and allowed to withdraw money from other banks’ ATMs free of cost for next three months. At a time, when the health crisis is deepening day by day, economy hasn’t recovered with industries and businesses yet to fully reopen, large scale job losses in multiple sectors with no sign of improvement in lives of migrant workers, this move of charging the depositors again for banking services is unwarranted and against the interest of people who are already facing financial difficulties. Finance Minister announced this measure due to the pandemic and harsh conditions people were facing, but in reality, these bank charges are hurting people and emptying out their small savings since last few years. Instead of withholding of these charges, the government should have announced the complete abolition of these charges.
With the three-month period ending on 30th June, many banks including State Bank of India rolled out all the previous charges as it is while Bank of Maharashtra has actually introduced new charges and even increased existing charges for banking services. On 30th June 2020, Bank of Maharashtra issued a notification that the bank has revised certain service charges and introduced new charges with effect from 01.08.2020. Earlier for saving account holders in Bank of Maharashtra, there were no charges for cash deposit and cash withdrawal in bank branches, but now the bank has set a limit on number of free cash transactions at bank branches and allowing 3 cash deposits and 3 cash withdrawals every month. After that bank will charge Rs. 100 for every cash deposit and withdrawal done at bank branches. Annual charge for debit cards has been increased from Rs 100 to Rs 200. Similarly, instead of Rs 200, now the bank will charge Rs 500 to close the bank account. It has also introduced a new charge of Rs.10 per withdrawal for ATM usage at POS withdrawal.
The hefty charges for cash transactions at home branches have been introduced by several banks in the recent past and these charges affect poor people disproportionately for doing small transactions. Additionally, people with no means or knowledge of digital technology have more transactions at bank branches and end up paying these charges for depositing (or withdrawing) their own money in their own accounts. People with no means of internet banking, with no knowledge of technology and for not feeling safe with digital transactions are paying huge amount of charges for cash transactions at bank branches.
Even in the last three months, despite the announcement by the Finance Minister, there were many instances reported by account holders that banks are deducting money for non-maintenance of minimum balance. In fact, in the midst of corona pandemic, when various state governments announced relief measures and deposited a meagre amount varying from Rs 500 to Rs 2000 in bank accounts of workers, in many cases banks deducted the entire relief fund in the name of bank charges. This amount of relief fund was already very less as compared to the kind of catastrophic crisis people are dealing with and that small relief amount was also deducted by banks as service charges.
The increase in service charges and introduction of new charges during the pandemic clearly indicates that banks are not shying away from taking advantage of this crisis and extract money from depositors in every possible way. Reserve Bank of India and Finance Minister of India have announced many relief measures for big companies and corporate houses but for small depositors there is no relief from banks. Instead of withdrawing all the bank charges permanently, banks are mercilessly deducting savings as service charges even during a time of crisis when people are already suffering due to the shattered economy. It is not just illogical and unfair but these charges on banking services are clearly a brutal and anti-poor policy to loot and penalise the people for being poor.
Private banks are two steps ahead when it comes to penalising the depositors for not maintaining the minimum balance. They are brazenly deducting large sum of money from saving accounts and not following the RBI guidelines with regard to charges for not keeping minimum balance. RBI guidelines clearly states that balance in an account should not become negative due to the service charges. Private banks charge more than Rs 600 per month for not keeping minimum of Rs 10,000 in saving accounts even when accounts are not operative and have zero balance. And, when account holders deposit money in their accounts after some time, private banks deduct huge amounts of money as penalty for not maintaining minimum balance IN THE PAST, which is a clear violation of guidelines issued by RBI. Reserve Bank of India should take stringent actions against such banks and banks must pay back the money deducted in the wrong manner to account holders.
Financial Accountability Network India demands that the Finance Ministry and RBI should issue clear guidelines for banks to withdraw all service charges permanently and must ask banks to return the money deducted illegally to depositors. To make the banking policies inclusive and non-discriminatory against people who cannot do transactions digitally and depend on bank branches for their banking activities, Reserve Bank of India should immediately ask banks to stop charging people for having cash transactions at bank branches. This is the most crucial time when people need money. Due to lack of employment, instead of putting extra burden through bank charges, people must be provided with all necessary financial assistance. Not just during the pandemic but banks should completely scrap all service charges for saving account holders as it is the money of these same depositors which all banks use for their lending activities, earn profit and run their complete business.
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