The Hindu Business Line : New pvt banks set to hike transaction fees

After having developed alternative channels of banking, the new private banks are planning to pack the traditional route of high-cost, branch banking with disincentives.

Mumbai , March 9

CUSTOMERS of new private sector banks might see new and more aggressive sets of charges as these banks analyse their profitability harder. Budgeting time is on in banks and this is typically when they will finalise the new sets of charges and schemes for the coming financial year.

If indications are anything to go by, there might be charges on large cash deposits and withdrawals and on ATM transactions. Perhaps in days to come, a fee might accompany every bank transaction or enquiry made.

"We might start charging customers who deposit large amounts of cash in our branches. ICICI Bank is already doing it, we too might consider the same," said an IDBI Bank official on a prospective note.

"The logic behind this charge is that banks now have the additional responsibility of currency management as part of RBI's Clean Notes Policy. Handling coins and small denomination notes is a cost-intensive procedure, the costs will slowly have to be passed on to the customer."

"In the year ahead we might ask the customer to choose a particular channel which is most convenient to him/her; access to that channel would be kept free while the other channels would come with a charge. So if the customer chooses to transact only through the ATM, visits to the branch, Internet banking and phone banking facilities might come with charge," said a senior official in another private sector bank.

On a candid note he adds, "The aim is simple, having developed alternative channels for banking we need to increase the fee income of the bank!"

Another approach that is being mulled is of `zero balance accounts with a fee for each transaction or enquiry'. This would mean that the customer need not maintain any balance in the account but instead pay a charge for each account statement, check on balance amount, ATM withdrawal and over the counter transaction.

Currently most private banks stipulate a minimum quarterly balance of Rs 5,000 in savings accounts.

After having developed alternative channels of banking, the new private banks are planning to pack the traditional route of high-cost, branch banking with disincentives.

So far in India only Citibank charges customers for stepping into the branch, others may soon follow. Incentives will also be dangled to customers to migrate to the cheaper alternative routes of the ATM, banking over the telephone or the Internet.

Numbers thrown by bankers explain the logic: a branch transaction costs the bank the most at Rs 75, an ATM transaction costs Rs 12, the call centre costs Rs 10 and the Internet the least at Rs 2.

In HDFC Bank and ICICI Bank charges are already in place for frequent ATM withdrawals in case the minimum account balance is not maintained. Recently ICICI Bank imposed a fee for cash deposits in non-host branches. Host branch is the particular branch in which the customer's account is maintained.

In many cases `unworthy' customers have been shown the door by these banks.

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