Panel finds many charges unfair

Our Bureau

Proposals


Working Group

for lower charges in rural areas, senior citizens, pensioners.

Rates must

be lower for individuals.

Mumbai, Sept. 15

Banks service charges are not based on cost. Most banks are unsure of the cost of their services.

That is the unanimous view of an RBI Working Group on Reasonableness of Bank Charges, placed in public domain today. The Group has asked the RBI to evaluate the costs.

The report listed several charges such as those on unsolicited services, erroneous transactions for which customers are not at fault, charges for balance inquiry, visit to branches and for book keeping are "unfair and unreasonable."

The working group recommended that banks should not insist on minimum balance on pension accounts.

The group said banks, which had benchmarked their service charges with those suggested by the Indian Banks Association, changed them from time to time, but not on the basis of their cost.

"In spite of de-linking the IBA benchmark rate, seven years ago, many banks claimed that they still maintain the linkage, with upward adjustment for inflation."

Lower charges

The Working Group has suggested lower charges for customers in rural areas, senior citizens and pensioners. Similarly, the rate of charges for individual should be lower than that of non-individual entities.

The working group is of the view that banks should provide basic services such as issue of pass book, cheque facility, balance enquiry, stop payment, issue of demand draft, pay order telegraphic transfer etc at reasonable charges.

Maximum service charge

The Group has rejected a proposal to prescribe a Maximum Service Charge similar to MRP in other sectors.

The Group had suggested the Banking Codes and Standards Board of India should seek from its members information on complaints relating to the rate of amount of service charges, the method of recovery and non-disclosure of service charges.

Banking codes

As many as 52 banks accounting for 93 per cent of the banking business in the country have joined the Banking Codes and Standards Board of India, according to Ms K.J. Udeshi, Chairman of the board.

(This article was published in the Business Line print edition dated September 16, 2006)
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