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Revised Bank Charges And Other Harmful Bank Practices

It is a sad fact of life, that the weak and the helpless in this world, are often victimized.

As an individual customer of the bank, we fall in the same category.

Despite being always prompt with our home loan EMI payments, we the small individual borrowers are often forced to pay higher rates. Interest rate reductions by the Reserve Bank of India are rarely passed on to us 'in full' or 'in time'. Rate increases, however, happen fully and instantly.

On the contrary, big corporate borrowers get steep discount in their interest rates, more so when they "default" (all in the name debt restructuring).

I don't know if RBI will ever wake up to this gross injustice. It's impossible to believe that they are unaware of this "organised loot". After all, they are among the best brains in the country.

So the only option for us is to be vigilant. If we manage our money well enough, it may be possible to minimize the impact of heavy costs and penalties that banks impose upon us.

Let's look at the charges / penalties on some of our day-to-day banking transactions.

Minimum Average Balance
To take care of the administrative costs in maintaining your Savings Account, banks want you to keep a certain minimum amount in the account.

This is in the form of average balance over a given period. The minium average balance varies typically from Rs.1000 to Rs.10,000. Earlier, this minimum balance was averaged over one quarter. However, nowadays, most banks have switched to monthly average balance.

As explained earlier, the calculation of the minimum monthly average balance is pretty simple and straightforward. So keep a close track of all your bank accounts and don't fall below the specified limit.

Penalty for non-maintenance of the minimum balance ranges normally from Rs.100 to Rs.750 per month.

Cash Deposits and Withdrawals
Each bank normally permits around three to five cash transactions per month, in the same city as your home branch, free of cost.

However, for cash deposits or withdrawals in any branch in other city (i.e. the non-base branch), there may probably be at most one or no free transactions.

Each extra transaction, over and above the minimum specified number, is charged around Rs.50 to Rs.150.

Some banks also have a cap (of around few lakhs) on the total sum of cash transactions in a month. Does your bank also prescribe any such limit? Check it out... today.

bank-charges-revised
Check out the revised bank charges... before you get a nasty shock.

ATM Transactions
Five transactions per month at your own bank's ATM do not attract any charges. 

Likewise, three transactions per month at any other bank's ATM do not attract any charges. (This is for the six metro cities. Else the limit is five transactions.)

Careful: Here, the word 'transaction' is not limited to only the financial transactions e.g. cash withdrawals. It includes all non-financial transactions too, such as balance enquiry, etc.

You have to pay Rs.10-20 for every subsequent transaction.

Fund transfers
Charges for online fund transfers — through NEFT, RTGS or IMPS — normally vary from Nil to Rs.50.

It is not possible to avoid such transfer charges. However, the total quantum can be kept to minimum amount, by planning and combining our funds transfers wherever possible. 

ECS or Cheque Returns
This comes with pretty heavy penalty. The first cheque or ECS return would cost you around Rs.100-350. 

Additional such defaults during the month / quarter attract higher penalty of around Rs.750. 

Duplicate statements
You will have to pay around Rs.50-100 for procuring duplicate statements.

So, unless it becomes really necessary, you should manage with online downloads.

Other service charges
Various other costs and charges levied by banks include
- SMS alerts (Rs.15 per month or quarter)
- Debit Card (annual fee of Rs.100-750)
- Lost Debit Card Replacement (Rs.200-300)
- Stop Payment Instructions (Rs.50-200 per request)
- Chequebook (Rs.2-3 for extra cheque-leaf, over and above 20-25 free cheque leaves per quarter)
- Photo / Signature attestation (Rs.100-200 per request)
- Address confirmation (Rs.50-100 per request)

Beware! The above-mentioned banking services and the charges thereof are only indicative. Since these are not standardized, they vary across banks. Hence, you must (a) carefully check the charges levied by your bank and (b) keep track of the amendments, if any, in the same from time to time.

Of course, we don't want that all charges be made zero. No, we understand that it is not a workable proposition.

All that we demand from our "trusted" bankers, is a "reasonable and fair" treatment.

By the way, all of above is small change compared to the couple of highly dubious and damaging banking practices.

The worst form of unreasonable and predatory pricing is not reducing the interest rates on floating rate home loans for the existing customers, while offering cheaper home loans to the new customers. They know that moving the loan to a new lender is a time consuming process. So many among the existing borrowers will continue paying 1-2% extra interest, rather than go through trouble of switching the bank.

Half-hearted attempts by RBI to stop this — by switching from PLR to Base Rate to MCLR  have all failed miserably. 

I wonder if there is much difference between the suited booted modern-day bankers and the dhoti-clad usurious moneylenders in small towns and villages.

The other extremely serious matter, that demands immediate remedy, is the rampant mis-selling of insurance, mutual funds and other such products to the unsuspecting, ignorant and uninformed customers. Numerous people have been unfortunate victims of such wrongful acts by their so-called "trustworthy" bankers.

The above practices should be completely banned and totally prohibited.

Must Read
Tell your banker to be a waiter.
Shouldn't bankers be doing what they do the best...banking
Don't Trust your Bank, Insurance Co. or Mutual Fund...or your Agent

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