Lok Sabha Question No. 2280 (UNSTARRED), answered on 2019-07-08
Subject: Bank Service Charges
Ministry: FINANCE
Asked by: Bhagwanth Khuba, Heena Vijaykumar Gavit, Kuldeep Rai Sharma, Supriya Sadanand Sule, Subhash Ramrao Bhamre, Sunil Dattatray Tatkare, Amol Ramsing Kolhe

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION No. 2280

ANSWERED ON MONDAY, JULY 8, 2019/ ASHADHA 17, 1941 (SAKA)

## BANK SERVICE CHARGES

| 2280. SHRI BHAGWANTH KHUBA: SHRI KULDEEP RAI SHARMA: DR. SUBHASH RAMRAO BHAMRE: DR. AMOL RAMSING KOLHE:   | DR. HEENA GAVIT: SHRIMATI SUPRIYA SULE: SHRI SUNIL DATTATRAY TATKARE:   |
|-----------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|

Will the Minister of FINANCE be pleased to state:

- (a) the details of basic common facilities provided by nationalized banks free of charge to its customers;
- (b) whether different banks charge different fees and surcharges for various services from the customers;
- (c)   if  so,  whether  the  Government  has  taken  any  steps  to  make  all  the  nationalized  banks  to  charge uniformally on different fees and service charges imposed by them, if so, the details thereof;
- (d) whether the RBI charges processing and time varying charges from banks for outward transactions through the RTGS and NEFT, if so, the quantum of charges collected by RBI during each of the last three years and the current year; and
- (e)   whether the RBI now plans to waive off these charges, if so, the details thereof and the objective behind the move and the other steps taken by the Government to educate people to use NEFT and RTGS while carrying out their bank transaction?

## ANSWER

## THE  MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) to (c) As per extant guidelines of Reserve Bank of India (RBI), following basic minimum facilities to the  Basic  Savings  Bank  Deposit  Account  (BSBDA)  are  provided  free  of  charge  and  without  any requirement for maintaining minimum balance in the account:

- i. Deposit of cash at bank branch as well as ATMs/Cash Deposit Machines (CDMs).
- ii. Receipt/  credit  of  money  through  any  electronic  channel  or  by  means  of  deposit  /collection  of cheques drawn by Central/State Government agencies and departments.
- iii. No limit on number and value of deposits that can be made in a month.
- iv. Minimum of four withdrawals in a month, including ATM withdrawals.
- v. ATM Card or ATM-cum-Debit Card.

Accordingly, as on March, 2019 the above facilities are provided to 57.3 crore BSBD accounts (including 35.27 crore PMJDY accounts) free of charge.

In addition to the above, banks may provide additional value-added services, including issue of cheque book,  beyond  the  above  minimum  facilities,  which  may/may  not  be  priced  (in  non-discriminatory manner) subject to disclosure. The availment of such additional services are to made at the option of the customers.  However,  while  offering  such  additional  services,  banks   shall  not  require  the  customer to   maintain a minimum balance and offering such additional services would also not make BSBD account a  non-BSBD Account,  so  long  as  the   prescribed  minimum  services   are  provided   free  of  charge  by  the banks.

For  accounts  other  than  BSBD  accounts,  as  per  Reserve  Bank  of  India  (RBI)'s  Master  Circular  on 'Customer Service in Banks' dated July 1, 2015, banks are permitted to fix service charges on various services  rendered  by  them,  as  per  their  Board  approved  policy,  while  ensuring  that  the  charges  are reasonable and not out of line with the average cost of providing these services.  Banks have been advised to identify basic services and the principles to be adopted/ followed by them for ensuring reasonableness in fixing such charges. They are also advised to take steps to ensure that customers are made aware of the service charges upfront and changes in the service charges are implemented only with the prior notice to the customers.

(d)  and  (e)  The  Reserve  Bank  of  India  (RBI)  vide  its  circular  on  'National  Electronic  Funds  Transfer (NEFT) and Real Time Gross Settlement (RTGS) systems - Waiver of charges' dated 11.06.2019, has decided that with effect from July 1, 2019, processing charges and time varying charges levied on banks by RBI for outward transactions undertaken using the RTGS system, as also the processing charges levied by RBI for transactions processed in NEFT system would be waived by the Reserve Bank. The banks are also advised by RBI to pass on the benefits to their customers for undertaking transactions using RTGS and NEFT systems.

The quantum of charges (Rs in crore) collected by RBI since 2016-17 is as follows:

| Year (April to March)   | RTGS               | RTGS                              | NEFT                        | Total   |
|-------------------------|--------------------|-----------------------------------|-----------------------------|---------|
|                         | Membership Charges | Processing + Time Varying Charges | NEFT Clearing house Charges |         |
| FY 2016-17              | 0.89               | 45.94                             | 38.71                       | 85.54   |
| FY 2017-18              | 0.94               | 52.30                             | 46.28                       | 99.52   |
| FY 2018-19              | 0.99               | 56.37                             | 52.92                       | 110.29  |
| FY 2019-20 (April-June) | 0.25               | 14.69                             | 13.62                       | 28.56   |

Source: RBI

This waiver of processing and time varying charges by RBI on banks will accordingly reduce the cost of RTGS and NEFT transactions for the customers and will give fillip to digital fund  movement.

Following RBI guidelines, rural branches and Financial Literacy Centres (FLCs) of banks conduct camps for financial literacy across the country.  Rural branches and FLCs of banks have been advised by RBI to use  the  audio  visuals  on  basic  financial  awareness  messages  inter-alia  including  electronic  payment systems NEFT/RTGS prepared by National Centre for Financial Education.

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