“It is easier to rob by setting up a bank than by holding up a bank clerk,” German poet and playwright Bertolt Brecht once said. This seems to hold good in the context of the increasing transaction charges levied by banks in India.
Banks, both in the public and private sectors, now permit individual account-holders to deposit and withdraw cash only a few times a month free of charge. Beyond that, ₹50 or higher is charged for every transaction.
Failure to maintain a minimum balance on a quarterly basis again attracts a fine. For instance, for accounts held in metro branches, the minimum balance required is ₹5,000. If the amount falls below ₹3,750 (or 75 per cent), penalty is ₹100 plus service tax in SBI.
Withdrawal of cash from ATMs attract a charge of up to ₹20 if the number of transactions from other banks’ ATMs exceeds three in a month and ₹10 for more than five withdrawals from SBI ATMs.
Even SMS alerts are not spared. For accounts holding quarterly balance of ₹25,000 or less, ₹15 per quarter is charged for SMS alerts.
The fault lies with the regulator, the Reserve Bank of India, and the government. While there is so much discussion on RBI autonomy, monetary policy, et al, the issue of consumer protection has been ignored.
NITI Aayog CEO Amitabh Kant said that the government has “long-term plans” to impose a cess on cash transaction in order to encourage digital transactions.
After November 8, 2016, many of us were suddenly pushed to explore digital modes of making payments even for the most basic purchases like buying daily rations. While a lot of us have moved to electronic payments, not many are aware of the costs involved.
In the case of National Electronic Fund Transfer (NEFT), wherein funds reach a beneficiary in hours, bank charges range from ₹2 to ₹25 depending on the value of the transaction.
As for Real Time Gross Settlements (RTGS), which permits large value electronic fund transfer, the minimum charge is ₹25.
For Immediate Payment Service (IMPS), which facilitates payments through internet banking, the charges ranging from ₹1 to ₹15
Mobile wallets gained traction during demonetisation. While there are no charges for transactions, transfer of money to bank accounts is charged. Though payments banks offer limited services to customers, they also levy a charge on cash transfers withdrawals. As regards Unified Payments Interface, each bank provides its own UPI app. Even the government has its own app called BHIM. According to the government, there is no charge for making payments using the UPI facility. However, if a payment is made from UPI to say a bank account using IMPS, NEFT or RTGS, then the bank will levy a charge.
As for credit/debit cards, there are usually two types of charges. One, the annual fee for issuing the card to the customer. And, two, the convenience fees that are charged at merchants’ outlets for swiping the card at a point-of sale terminal. Credit cards come with higher fees and if you do not use them judiciously, you could end up paying very high interest rates, which variy from bank to bank. Agreed there are no free lunches, everything comes at a price. Digital payments are gaining traction and although the charges may not seem much, over a period of time they eat into the common-man’s savings.
It’s time the government looked at the safety and legal framework of the digital infrastructure before pushing people away from cash and into the digital mode.
The author is an MP and former chairman of Public Accounts Committee