Panel banks on consumers

There8217;s reason to smile for harried bank customers hit by soaring service charges.

There8217;s reason to smile for harried bank customers hit by soaring service charges. A panel set up by the Reserve Bank of India has proposed that banks should levy transparent and lower services charges on customers.

It has indicated broad principles of reasonableness for bank charges. 8220;For basic charges rendered to individuals, banks will levy charges ad valorem subject to a cap,8221; the panel said.

The working group has recommended fixing of lower rates for individuals as compared to corporate entities, and lower rates for special categories of individuals such as senior citizens, rural customers, and pensioners.

The panel was constituted after the RBI received numerous complaints from the public and from media outlets about private and foreign banks charging arbitrary and high rates on their services including on the credit cards.

The working group enumerated 27 services related to deposit accounts, loan accounts, remittance facilities and cheque collection as basic banking services and has defined low value transactions for cheque collection and remittance up to Rs 10,000 in each case and up to 500 for forex transactions.

It has recommended that banks should provide to individual customers complete information on all charges and any proposed changes in a timely manner.

8220;Banks may also be required to inform customers in all cases when a transaction initiated by the bank itself results in or likely to lead to a shortfall in the minimum balance required to be maintained,8221; the report, now posted on the RBI website and inviting public comments, said.

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The group observed that in a number of cases the charges have been fixed without proper reason or the charges are not fair. For example, the group said, the charge for absence of any transaction in a quarter is patently unreasonable since the bank is not incurring any additional cost.

Similarly, the group said the banks impose cheque-bouncing charges even if the inward cheques are wrongly returned or returned only for technical reasons. The working group said the banks have to penalize the customers only if the customer is at fault 8212; return is for non-maintenance of sufficient funds; cheque return for other reasons where customer is not responsible, should not attract any charge.

The group is of the view that levy of a fee for a visit to the branch is not justified. 8220;This charge stands as a barrier to customers who find that without personal interactions at the bank, they are unable to avail the services they need,8221; they said.

The proposals

8226; 27 services listed for charges

8226; Inform customers about charges fully

8226; More transparency on mimimum balances

8226; Levy on branch visit not justified

8226; No charge for cash handling