When banks levy hefty charges for services, customers feel the pinch

Chennai: The government’s emphasis on increasing cashless transactions after it made its ‘surgical strike’ on black money has seen trends change with regard to handling currency in the country.

Most retail shops have adopted at least one mode of online, point of sale (PoS) or unified payments interface (UPI)-based cash transfer.

The Reserve Bank of India (RBI), too, has not shied away from announcing its intentions to increase e-transactions.

The ‘Payment and Settlement Systems in India: Vision 2019 – 2021’, released by the apex bank with its core theme of ‘Empowering Exceptional (E)payment Experience’, envisages to achieve ‘a highly digital and cash-lite society’ through the goal posts of competition, cost-effectiveness, convenience and confidence.

However, giving banks such power to deal with has led to consequences that mostly came after (or with) the revision of charges since April this year.

For savings accounts, minimum balances were raised and the ATM withdrawal charges, when exceeding the limit prescribed by the bank, have been increased without notice.

What comes as a shock to many is the decision to charge people when they use their credit or debit cards at fuel stations, especially when the government has been asking people to adopt cashless payment methods and offering them incentives like cashback.

Bank of Baroda, for instance, charges Rs 10 per transaction, plus GST, regardless of the amount of fuel bought per transaction. An official from the bank, when contacted through the toll-free number, confirmed the revision of rates. However, the person did not explain the basis for charging people for every transaction.

For current account holders, the situation is worse, for they are charged more. An accountant working at an organisation in Chennai said, “The banks have increased charges exponentially after 1 April. Apart from levying monthly charges, they charge us for cash deposits, exceeding the limit, etc. They even reduced the number of transactions that can be done per quarter and charge us if that number is exceeded.”

It is to be noted that each bank charge mentioned above attracts GST, which accountants say cannot be recovered by the firm. “Some banks allow customers only a select set of reimbursements based on their history. Others do not entertain that possibility, too,” she said.

Firms have been forced to handle cheques more carefully as well, since in case a cheque bounces, then the firm which deposited the cheque will be fined more, three times in a few cases, than the person who offered the leaf.

An IDBI bank official, on condition of anonymity, stated that these charges help banks recover lost ground in ‘testing times’. “It is no secret that banks earn more through these fees. Minimum balance has been increased, as have charges relating to sending text messages to customers. Such increase in charges help banks keep their operating costs in check, especially when NPAs are rising.”

“However, on the flip side, we are facing hurdles in adding more customers since they feel that the minimum balance is high,” he said.

Customers who have availed of housing loans face different problems. Balaji, a salaried professional from Chennai, has to write to the bank official to reduce housing loan interests when there is a rate cut. “They charge me close to Rs 3,000 as bank charges to revise my rates. However, if the rate is hiked, they revise the rates without delay. At the first instance, there was no notification either, meaning people have to follow the industry closely to avail of such benefits,” he said.

The inclusion of GST was pitched as a method that will reduce costs in the long run. However, retail stores have been found to take advantage of the ‘country’s biggest tax reform’. Many store owners collect the bank charge amount from customers, robbing more money from them when transactions are done through card.

Further, when firms adopt Mswipe or PoS systems, they incur extra bank charges if customers use a credit card to make payments, apart from maintenance charges that are separately collected once every quarter. Documents obtained by News Today from City Union Bank and Axis bank reveal this.

According to industry insiders, the revision of rates were planned a year ago, giving ample time for banks to adapt to the change. In some cases, the revision was formulated in 2017, although the implementation was done this April.


The Reserve Bank of India expects the number of digital transactions to increase more than four times to 8,707 crore in December 2021. It has said the payment systems landscape will continue to change with further innovation and entry of more players which is expected to ensure optimal cost to the customers and freer access to multiple payment system options.

“While the approach of the RBI will continue to be of minimal intervention in the pricing of charges to customers for digital payments, all efforts will be made towards facilitating the operation of payment systems which are efficient and price-attractive,” it said in its recent statement.

Praveen Kumar S