MUMBAI: Mumbai: In this world nothing can be said to be certain, except death and taxes. If author Benjamin Franklin who wrote this sardonic sentence in 1789, was alive and in India, he could have included bank charges as well! The government’s increasing push for a cashless economy would have one believe that digital transactions come with lower fee and service charges. Ironically, our high street banks are doing just the opposite.
Following demonetisation last November, there was an exponential rise in electronic payments and online transactions, opening a window for bankers to promptly revise charges. SBI, the country’s largest public sector lender, increased charges on a slew of services including minimum balance in savings accounts (excluding Jan Dhan), NEFT, RTGS, and ATM withdrawals. Others like ICICI Bank, HDFC, Punjab National Bank soon followed suit. But the rise in charges and remonetisation meant the number of digital transactions fell with a giant thud.
As per RBI data, the number of digital transactions stood at 71.27 crore as on October, 2016, shot up to 123.46 crore as on December, 2016 but fell to 111.45 crore as on May. Consumer anger gathered momentum thanks to online petitions and Twitter campaigns opposing the exorbitant fee. Perhaps this, along with the falling digital transactions, forced SBI to take a u-turn early this month. The bank reduced charges by up to 75 per cent on NEFT and RTGS, besides waiting charges on interbank mobile or IMPS transfers. “In sync with our strategy and complementing the focus of Government of India to create a digital economy, we have taken one more step to promote use of internet banking and mobile banking for doing NEFT and RTGS transactions by reduction of the charges,” says Rajnish Kumar, MD, SBI.
Banks say the fee increases are a reflection of ballooning expenses on infrastructure and to ensure security and speed while facilitating online transactions. They also pay vendors like Visa and Mastercard, every time we swipe a card. Until now, these costs weren’t passed on as banks recovered money from merchants like say a Big Bazaar outlet whenever plastic money was at play. But the government’s Unified Payment Interface (UPI), the online payments gateway that allows digital transactions minus the use of physical debit or credit cards, took the swing in the tail out of plastic threatening to reduce or/and eliminate card usage. As more users opt for online payments, income sources from merchants to banks plunged, forcing banks to look for alternate revenue streams. This partly explains the reason for an increase in charges.
However, consumer bodies feel the exorbitant levy is nothing but legalized robbery. From reducing number of free cash transactions at branches and increasing charges on withdrawals and deposits, to penalizing customers for non-maintenance of average minimum balance, it appears that banks have developed an appetite for levying charges. In reality, some of these existed in the past, and were simply re-introduced, but the move has rankled customers. Cash is still mainstream for transactions and the levies seem arbitrary and unacceptable.“Digital transactions offer convenience and speed, but service providers have to ensure safety. It involves investments in technology and continuous updates, and hence customers see a revision in fee and charges,” explains A P Hota, MD, NPCI.
But should there be a cap on how much one can charge? The RBI has been proactively improving customer service, but has maintained a stoic silence, as it’s a de-regulated area and will continue to be so, according to out-going RBI Deputy Governor S S Mundra. This, opponents fear, could lead to customer-unfriendly practices in the future. For instance, HDFC Bank recently charged customers for unsolicited value added services and without seeking consent, but eventually backed out after facing flak from customers online. However, the RBI is stepping up focus on grey areas like these, to ensure that banks are consumer focused.