1. Why outrage over hike in charges for cash deposits, withdrawals is surprising; government’s request to SBI inexplicable

Why outrage over hike in charges for cash deposits, withdrawals is surprising; government’s request to SBI inexplicable

Given how much of urban India is now familiar with transacting on electronic channels, the uproar over the proposed hike in charges for cash deposits and withdrawals beyond a limit, is surprising.

By: | New Delhi | Updated: March 8, 2017 6:06 AM
State Bank of India, Fintech, Rajnish Kumar, State Bank of Bikaner & Jaipur, State Bank of Mysore SBI is asking customers to maintain a minimum average balance of R5,000 in the six metros, and levying a fee between R50 and R100 plus service tax if they fail to do so.(Reuters)

Given how much of urban India is now familiar with transacting on electronic channels, the uproar over the proposed hike in charges for cash deposits and withdrawals beyond a limit, is surprising. What is inexplicable is the government’s request—or perhaps diktat—to State Bank of India (SBI) to reconsider the planned increases in charges relating to cash transactions since one of the objectives of demonetisation, you would think, was to discourage the use of too much cash and move to digital payments that can be tracked. If the costs of depositing/withdrawing cash are going to be on a par with those for digital payments, why would people move away from cash and use NEFT, IMPS or UPI? In the case of SBI, asking savings account holders to pay a fee of R50 plus service tax if they deposit cash more than three times in a month is not being unreasonable since few customers, apart from daily-wagers need to deposit cash more often in a savings account. Customers must appreciate that all services have a cost attached to them and that banks are running a business; installing and running an ATM machine is an expensive proposition, as is transporting cash across the country, maintaining a bank branch and issuing cheque books to customers.

The minimum balance, in fact, is related to this. SBI is asking customers to maintain a minimum average balance of R5,000 in the six metros, and levying a fee between R50 and R100 plus service tax if they fail to do so. The current minimum of R1,000 with cheque book facilities is fairly low; the cost of servicing a savings account—apart from the 4% interest rate—works out to R80-100 per month and has to be recovered from customers. The graded minimum balance requirement of R3,000 and R2,000 for urban and semi-urban branches, respectively, does not seem high either—with a per capita income of over R1 lakh a year, the minimum account balances seem reasonable; SBI has already clarified that the minimum balances don’t apply to Jan-Dhan accounts that the poor have.

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In the case of private banks like HDFC Bank, the R2 lakh limit below which no fees will be charged for cash deposits/withdrawals is quite generous. The distinction between the ‘home’ branch and the ‘non-home’ branch (the limit for free transactions halves for non-home branches) is odd since, in any case, the spread of ‘core’ banking meant consumers could treat any branch across the city/country as a ‘home’ branch when it came to withdrawals/deposits —customers have to be allowed to withdraw/deposit cash at any branch that suits them, subject to the R2 lakh cap for free transactions. While private sector banks—HDFC Bank, Axis Bank and ICICI Bank—are allowing just four free cash transactions and are charging a minimum of R150 for a transaction beyond that, this appears stiff. Clearly, the banks are not afraid of losing customers, but scaling up the charges gradually, as society gets used to less cash, would be a more considerate way to do it.

  1. Monesh Chavan
    Apr 8, 2017 at 12:21 am
    Dear everyone, I request every one to please close your sbi account as soon as possible, otherwise this bank will make us poor in very short time. Before 16days I have opened current account with SBI. but Today due to lots of charges increased in SBI I decided to close that current account But After visiting banks branch I came to know That my new current account has debit balance of rs 2934. Even I haven't received the cheque book for my further transaction they have charged me to 2934 which is enough for 15 days new account. Therefore I deeply request you to go and check your account status and close your all sbi account as soon as possible, and also share this information to your friends as much as possible. If you want to check my new account transaction a Just show this message to the bank employe as I am giving my open permission to show my acc transaction to whoever want to see, details are LAXMI Enterprise. C/account No.- 36510610476. Mob. 9945257111 Monesh chavan
    Reply
    1. A
      asdasd
      Mar 9, 2017 at 4:40 am
      asdasd
      Reply
      1. Bhagwanji Waghela
        Mar 8, 2017 at 3:36 pm
        Government demonetized Rs.500 / 1000 Notes. People had to compulsorily deposit the notes in bank accounts. Bank have charged fees for cash deposits. Now the banks want to charge fee for cash withdrawals. On one hand Narendra Modi talks of cashless system and on the other hand banks are increasing charges. This is unjustified. Perhaps Banks have decided to defame Narendra Modi by making banking channels unaffordable. This can only encourage parallel economy and black money.
        Reply
        1. G
          Gautam Mayal
          Mar 8, 2017 at 5:07 pm
          (The distinction between the ‘home’ branch and the ‘non-home’ branch (the limit for free transactions halves for non-home branches) is odd since, in any case, the spread of ‘core’ banking meant consumers could treat any branch across the city/country as a ‘home’ branch when it came to withdrawals/deposits —customers have to be allowed to withdraw/deposit cash at any branch that suits them, subject to the R2 lakh cap for free transactions)Non home free service option should be for customer himself only not to make deposit by other party acting as agent of the customer.
          Reply
          1. H
            Hari
            Mar 8, 2017 at 4:08 pm
            This is totally unjustified and additional burden should not be put on a common man who is already dying under unbearable taxation imposed by different corrupt and inefficient govt in past. SBI should approach govt to pay who is responsible for an opening of JAN DHAN ACCOUNT for political propaa otherwise, close all these inoperative accounts. Do not put any burden on consumers.
            Reply
            1. Shankar Shankar
              Mar 8, 2017 at 5:52 pm
              This is unlawful, violation of fundamental rights and will not stand in a court of law. No one in this world can levy charges on our own money. Public is lenders to banks and banks have no right to charge anything on depositors money. Charging for return of cheques, non payment of EMIs on loans borrowed from banks, defrauding banks etc are the areas where banks have to collect charges and not from depositors money. Public has taught lessons to several arrogant governments in the past and this time also it will not be an exception, but it is only a matter of time.Those who have attained 60 years have no obligation to the public and this will be the result if their services are extended
              Reply
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