We all trust our bankers blindly and a lot of us are totally unaware of the charges that bank levy and have never checked whether their bank announces them transparently. They always ride on consumer trust, apathy and ignorance. Unfortunately, a large discerning group is aware about the many charges and they entrusted bank that alert them transparently. Ironically, banks have not been taking their responsibility and hence, do not inform the customers accordingly. Worse, these arbitrary and unexplained charges are introduced after luring you with the promise of several free frills and locking up the relationship through salary account, credit cards, loan installments, systematic investment plans and ECS for payment of dividends or utility bills. Read also: Grievances of Bank Depositors
Let us now examine each element of these high service or convenience charges in the eyes of banking system.
SMS Alerts Charges 

First, every bank lured people to sign up for the SMS alerts as a security measure and saying it was free. If banks are expected to provide this service free, what explains the new charges? Well, banks are now clubbing it with alerts for every debit and credit in the account to levy charges. Although the paltry sum levied is approximately Rs5 a month or Rs60 per annum, most people feel cheated by these charges that they have never opted for an SMS alert. 

One of mine, clients who told me that he has never opted for an SMS alert but noticed these charges in his passbook. When he asked for it to be cancelled and the charges reversed, his banker used the opportunity to impress on customer that it is a mere Rs5 every month. This may seem like a small amount, but a rupee saved is a rupee earned. The charges you pay can amount to a lot over the years, especially if you have multiple accounts you don’t use often.Being an alert customer, it is believed that it is only a matter of time before banks raise these charges. After all, most banks have substantially hiked debit card charges recently. Ultimately, he was asked to make a formal representation to the bank to get deactivate the service and reversing the charges. 

Minimum Balance Charges 

Most nationalized banks require average minimum balance in your saving account is between Rs500 to Rs1,000 and private and foreign banks require the same of Rs5,000 and above. Worse, banks are also notorious for raising the minimum balance requirements without bothering to inform customers. Each bank has its own set of rules for calculating the average minimum balance. These charges are levied to the tune of Rs100 to Rs1,000, some do it on monthly basis and others on a quarterly basis. Most often, their calculation is tailored to the bank’s best interest. 

The minimum balance rule is significant for those who have salary accounts that are negotiated at a zero balance requirement and decide to switch jobs. As they are no longer an employee of the concerned company, all the normal costs kick-in. Also, there is no alert or intimation when the average balance sinks below the threshold limit of minimum requirement. It is up to you to be aware of it, reversing the charges if you complain and threaten to escalate the matter. 

ATM and Debit Card Charges 

Most banks proclaim free ATM and debit cards at the time of opening new accounts; begin to charge an annual fee from the second year. These annual charges will reflect every year to the tune of Rs100 to 250 plus tax as debit card charges.  Those who are lured by the high interest rate of 7% on saving accounts, their charges are higher than those of other banks. Add-on cards have also attracted a separate additional fee for the same. 

ATM Transaction Charges 

You must be aware that as per RBI guidelines, all debit cards issued by banks in India can be used at any bank ATM within India. Now if you are a saving bank account holder, then you can do five transactions free of cost at other bank ATMs in a month. This is inclusive of financial and non-financial transactions. From the sixth transaction onwards, you will be charged a transaction fee by your bank. 

The service charges ranging from Rs20 upwards are levied sixth transaction onwards at other ATMs varies from bank to bank. However, there are some banks that they don’t charge anything for any number of transactions even if you are not their customer. 

Cheque Transactions Charges 

Cheques returned without being paid, whether deposited or issued by you will entail a cost. Banks charge anywhere between Rs50 to Rs500+ for returned cheques. So it is worth the effort to sign consistently, mention correct dates, maintain sufficient balance, and ask persons to whom you give post dated cheques not to deposit them before the due dates. Unfortunately, there is little you can do if a cheque you receive returns unpaid. Similarly, an instruction to the bank to not pay a cheque after issuing it will cost you. 

Every bank provides accountholders with a chequebook with a certain number of leaves free every quarter. Requesting chequebooks beyond the allowed quota would cost you to the tune of Re1 per leaf to Rs10 per leaf. 

Account Closure Charges 

A significant number of customers are unaware about the closure of their accounts attract account closing charges, especially when the account is closed within a year. Since the process of opening an account and completing know your customer (KYC) formalities is so tedious, being loyal customers must not be closed their account within a year. However, a big irritant to customers is that banks make it difficult to close accounts.
Dormant Account Charges 

Most customers have multiple saving accounts; it may so happen that they may completely forget an account for few years until they found their old ATM or cheques. If there is no transaction in account for two years, other than interest credit in saving accounts, the bank will declare it as dormant or inoperativeaccount.
Once, the account turns dormant, it gets deactivated, hence you cannot operate account like ATM withdrawal, no cheque clearance etc. However, there is no formal procedure to get activate your account and may vary with banks, one can visit a bank and submit a written application with valid reason for not using account. While, there are no charges for reactivation, one has to make debit/credit transaction in the account. Worse, if you left the account dormant and the bank levies charges to this account by inadvertently, it could get reported to the Credit Bureau as a default/ outstanding and needlessly affect your credit record.
Other Common Service Charges
Besides the above, a slew of charges for every additional service they offer such as copies of duplicate statements or passbooks charges, cash deposit and handling charges, NEFT charges and a duplicate PIN number for your ATM card and even electronic banking passwords are charged.  

Clearly, you need to always be vigilant, become more alert and fight for your rights. Otherwise, they are doomed to keep paying higher charges for banking services. Keep an eye on your bank account statement periodically and report immediately if any unsubstantiated charges are found. Read also: How Banks fooling Home Loan Customer?
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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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