Anger grows over banking charges
| Jayanta Roy Chowdhury, Aug 6, 2017
The tide of opinion is moving overwhelmingly against hikes in bank transaction charges.
A growing number of consumer complaints, online petitions and Twitter campaigns against the hikes are forcing the North Block and the RBI to wake up to possible voter anger.
"Bank charges, whether on cash use or on electronic transfers, have been going up as has the GST on these. Cumulatively, the impact on a consumer has gone up... the ministry has been asked to look into this and we are thinking of ways to lower the burden on consumers," top officials said.
There have been suggestions that electronic transfer charges should be cut further and the GST on such transaction be waived to provide partial relief to customers as well as to encourage a digital economy.
Officials said complaints had been received from consumer groups, politicians and bureaucrats.
Recently, a memorandum was submitted to RBI governor Urjit Patel by a group of consumer rights groups and bank unions, which pointed out the disturbing trend of "unfair treatment that bank customers suffer in the form of frequent, arbitrary and one-sided increase in banking charges".
Transaction fees
Led by the SBI, most banks are now charging a transaction fee on cash withdrawals, either from ATMs or bank counters beyond the first four withdrawals in a month.
At the same time, rates for electronic transfers have been rising after being capped or reduced post demonetisation.
Charges for debit or credit card swipes have also been rising.
Services, which were earlier free, are being charged, such as cheque books beyond the first free book in a financial year.
On top of these fees, is the new 18 per cent GST on each financial transaction.
Bankers pointed out that typically an ATM withdrawals beyond the first free four could mean a charge of Rs 150 plus Rs 27 as the GST.
Even the use of mobile wallets attracts a fee plus GST. For example, the SBI charges customers of its mobile wallet State Bank Buddy 3 per cent of the money being transferred plus GST at 18 per cent.
The petition to Patel pointed out that "frequent increases in charges and billing customers by stealth through opt-out clauses that are not noticeable must be stopped immediately".
Banks have argued that the fee increases are a sign of rising expenses on infrastructure, such as more ATM points, cyber security, leased lines and satellite use for real-time transactions. Banks claim such infrastructure support has increased the speed of transactions and service quality.
The revenue department has also pointed out that the GST on financial services is common globally.
Bad loans
However, customers feel the fee hikes merely reflect banks' attempts to recover losses or decline in profits on account of higher levels of bad loans.
The Indian banking system is beset by a surge in bad loan provisioning.
Decades of following a policy of easy lending and easy re-writing of loans to big-ticket projects in the steel, infrastructure and power sectors have suddenly resulted in a surge in bad loans.
Public sector banks alone are burdened with non-performing assets worth a staggering Rs 6.1 lakh crore, which are hurting economic growth as panic-stricken banks have slowed down credit to industry.
The top 50 bad loans, or non-performing assets, are in steel, textiles, power and infrastructure.
The Reserve Bank of India recently named some top 12 NPAs for immediate resolution and these dozen bad debts alone totalled over Rs 2.2 lakh crore.
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