Clearing the air over bank charges

Has the recent hullabaloo over bank charges rattled you? If yes, it’s time to clear some of the misapprehensions. Yes, SBI — the country’s largest bank — has introduced and tweaked certain charges, and HDFC Bank has increased its charges on cash transactions in bank branches.

But aside from that, leading banks have not hiked charges on key transactions, as many believe. The charges that pinch customers the most — on non-maintenance of minimum balance and cash deposits and withdrawals at branches and ATMs — have always existed. It’s just that some that were temporarily waived off, post demonetisation, have been restored.

Much of the big noise over bank charges has been thanks to SBI introducing charges on non-maintenance of minimum balance. These charges had been withdrawn in 2012 and have been re-introduced now. Hence with effect from April 1, 2017, if the monthly average balance falls below ₹5,000 in savings account (in metros), a charge of up to ₹100 plus service charge (depending on the shortfall) will be levied. The minimum balance requirement and charges are a tad lower for rural, semi-urban, and urban areas at ₹1,000-3,000 and up to ₹50-80 respectively.

SBI has also made some minor changes in its ATM and cash transaction charges in branches. Transactions up to five in same bank ATMs and three in other bank ATMs (in top six cites) are free, beyond which banks levy charges. SBI has increased charges on financial transactions (beyond free transactions) on its own ATM from ₹5 to ₹10. Charges levied on other ATMs remain the same at ₹20.

SBI allows inter-changeability between branch and ATM transactions. This means you will be allowed maximum 10 free transactions at 6 metros at SBI ATMs, if you have not done any transaction at branch or other bank ATM.

If you hold a minimum balance of upto ₹25,000, then free withdrawals from branches have been capped at two from four earlier, beyond which a charge (unchanged) of ₹50 is levied.

For minimum balance between ₹25,000 to ₹50,000, SBI continues to offer ten free withdrawals. HDFC Bank, that levied ₹100 per transaction (cash deposits and withdrawals at bank branches) beyond five free ones, has tweaked it to four free transactions and a charge of ₹150 from the fifth transaction onwards. These tweaks just about sum up the revision in bank charges by leading banks in recent weeks.

The list of charges that have not undergone any change is fortunately longer.

ICICI Bank, for instance, has always levied a charge on non-maintenance of minimum balance of ₹100 plus 5 per cent of the shortfall in required minimum monthly average balance.

For HDFC Bank, charges range from ₹150-600. Axis Bank charges ₹10 for every ₹100 shortfall or ₹350, whichever is lower.

Charges on cash deposits and withdrawals, which have been at the centre of the recent upheaval, have remained unchanged for leading banks, except HDFC Bank (mentioned above). For ICICI Bank, after first four free transactions in a month at branches in the home city, ₹5 per ₹1,000 is charged, subject to a minimum of ₹150 per month.

In the case of Axis Bank, first five transactions in metro or urban and ten in semi-urban or rural or ₹10 lakh, whichever is earlier, are free, above which a charge of ₹5 per ₹1,000 (or ₹150 whichever is higher) is levied.

These charges that were waived off by banks, post demonetisation, have been restored, with no increase/change.

For SBI too, charges on cash deposits in branches have not been tweaked. Beyond three deposits a month, the bank charges ₹50 per transaction. This charge was already in place, effective June 2016, and has not been increased since then.

ATM charges too, that had been waived off due to the cash crunch, were restored by banks in January this year, with no change in pricing structure. Beyond the limit for free transactions, HDFC Bank, ICICI Bank and Axis Bank continue to charge ₹20.

Barring the changes discussed above, you are not coughing up extra moolah on transactions at your bank branch or ATMs, at least in leading banks. It may pinch to pay for depositing and withdrawing money from your own account. But you have always been paying the price!