No reduction in bank charges, State Bank of India continues to 'fleece' citizens

Counterview Desk
The Financial Accountability Network (FAN), India, a collective of civil society organisations, unions, people’s movements and concerned citizens to raise the issue of accountability and transparency of the national financial institutions, in a public statement has said in a public statement that media reporting on bank charges is misleading, pointing out, State Bank of India (SBI) "continues to fleece its customers."

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There has been misleading media reports, which claimed that SBI has revised various services charges. The reports claimed that there has been a reduction in minimum balance required to maintain monthly, reduction in penalty for not maintaining minimum balance and restrictions on number of cash transactions allowed at the bank branches.
A close scrutiny of documents reveals that there have not been any reductions that are being claimed in the media. The only change in charges by SBI has been reducing of the SMS alert service charges from Rs 15/month to Rs 12/month, and the removal of service charges for online National Electronic Funds Transfer (NEFT) and Real-time Gross Settlement Transaction (RGST).
The latter was done after the Reserve Bank of India (RBI) waived off the charges levied by them for NEFT and RTGS transactions. The last few weeks, SBI, in fact, has included charges for the newly introduced services like Rupee Prepaid Cards.

SBI’s latest notification of revised service charges, which will be applicable from October 1, 2019 does not mentioned changes in existing charges. At a time when there is a strong demand from the people to reduce the bank charges, media reports like these are not ust misleading but irresponsible.

Monthly minimum balance

SBI started penalizing its saving account holders for not maintaining prescribed minimum balance in April 2017. Later in October 2017, the bank reduced the minimum amount to maintain monthly and penalty for not maintaining the same in the saving accounts. Again, in April 2018, bank further reduced the penalty for not maintaining the monthly minimum balance. The list changes made can be seen in the table.
The two-time reduction in penalty within 12 months happened after much criticism the bank got from its customers and media. Between April-November 2017, SBI earned more money through penalizing the customers for not maintaining minimum balance then its own profit from second quarter of the same year. SBI earned Rs 1,771 crore in eight months by charging people, while their July – September quarter net profit was Rs 1, 581.55 crore.
In the new notification issued by SBI, there is no reduction in both – the minimum monthly balance requirement and the penalty for not maintaining it.

Service charges for Immediate Payment Service (IMPS) and RTGS transactions

After waiving off the charges for NEFT and RTGS transactions by RBI in June 2019, the commercial banks were also asked to pass the benefit to the customers. SBI revised charges for NEFT and RTGS in August 2019. It reduced the charges for online NEFT & RTGS to NIL and for same transactions at bank branches which can be seen in the table below. 

As of now, not all the banks have transferred the benefit of reduction in NEFT and RTGS charges by RBI and they continue to charge as per their board approved service charges.

Deposit and withdrawal limits and charges beyond allowed number of free transactions

As per SBI notification (with effect from April 2017) which is still available on its website: Saving account holders with Rs 25,000 or below as the minimum balance in previous month, can have 3 cash deposits and 2 cash withdrawals from bank branch. Thereafter the bank is charging Rs 50 per transaction for cash deposit as well as cash withdrawal.
We would like to reiterate that the service charges are nothing but transferring the loss made due to corporate bad loans on to the people. Hence, we demand the RBI and the banks to remove all charges that are burdening the people.