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RBI "appeases" tech savvy upper class, refuses to remove big penalties affecting poor

Counterview Desk
Even as welcoming Reserve Bank of India's decision to remove RGTS and NEFT transactions the Financial Accountability Network India (FAN India) – a group of civil societies, unions, NGOs and peoples movements – has said that it merely seeks to boost digitalisation and 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).
In a statement, FAN India has said, RBI has ignored the interests of the weaker sections of society, which are affected most due to higher charges on basic services, pointing out that a pilot study conducted by RBI in Mumbai has revealed that over than 25% 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."

Text of the statement:

The Financial Accountability Network India (FAN India) welcomes the Reserve Bank of India’s (RBI's) decision to remove charges for the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (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.
While the RBI’s decision on removal of the charges on NEFT and RTGS and setting up a Committee is appreciated, it is important to note here 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. It is a welcome step that the central bank has now recognised the problem of charges levied by banks for providing various services.
We demand 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. We also demand that the RBI does not deal with the charges in piecemeal but scraps all bank charges.
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.
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 the maintaining minimum balance, which varies from Rs 10 to Rs 600, and charges on cash transactions, ranging from Rs 10 to Rs 160, done at bank branches.
Recently, a pilot study conducted by RBI in Mumbai revealed that over than 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. Just last week, the Maharashtra government has blamed banks for applying various charges on beneficiaries’ accounts, which is making it difficult for beneficiaries to access the money.
On the one hand, 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. And on the other, they are allowing free transactions for online users, again neglecting people still dependent on brick and mortar bank branches for their banking activities.
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.
Our campaign "No Bank Charges” has witnessed hundreds of people sending postcards and emails to the RBI governor, the Finance Minister, and the Prime Minister demanding to scrap all the bank charges.
Our demands:
  • The committee on ATM charges should be open for consultations and remove the cap on transactions as well as the charges. 
  • RBI does not deal with the charges in piecemeal but scraps all bank charges.
The Financial Accountability Network India (FAN India) – a group of civil societies, unions, NGOs and peoples movements – demands from the RBI and the government that it looks into the matter of bank charges on banking services and take immediate actions to remove all the charges which act against the interest of the people.



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