Come July 1 and bank customers will discover they will have to pay even more for a host of banking services. After the Prime Minister’s demonetisation move in November last, people were made to understand that going cashless meant conducting all their fincial transactions through banks. The Central government had then issued a directive ‘in public interest’ to all public sector banks not to charge fees for digital transactions upto a certain upper limit. The Reserve Bank had followed suit by deciding that till March 3 this year, banks will not levy any charges on customers for transactions up to Rs 1,000 on certain payment services and interfaces. However, amidst all this sweet talk to lull bank customers, the powers-be failed to mention that banks were bound to charge for their services as they happen to be running a business. And thus it was that banks including the State Bank group made it clear after March that customers will have to pay charges for ATM cash withdrawals beyond an upper limit per month, net banking through NEFT or RTGS, non-maintence of minimum balance and other services. Many bank customers have found to their chagrin that they will have to shell out more for service charges, irrespective of whether they use or don’t use their bank account! From July 1 with the rollout of Goods and Services Tax (GST) across the country, bank customers will feel the pinch more. This is because the tax rate on bank services will increase from current 15 percent to 18 percent under the GST regime. With the GST council having filised the five different tax slabs at nil, 5 percent, 12 percent, 18 percent and 28 percent — bank customers will do well to keep in mind that they will be using a fincial service to be taxed at the second highest rate.
In the wake of the currency flushout, the many changes in banking regulations almost on daily basis ended up confounding customers no end. The pain and confusion is likely to continue much longer after the GST regime kicks in. Business groups and fincial institutions conducting their transactions will remain largely unscathed; it will be the individual customers who will find the new tax rate burdensome, fincial experts have cautioned. Individual customers may be forgiven if they wonder about the benefit of going digital if the banks are going to charge them at every turn. Will this bring ‘bad old cash’ back into the picture? There are also heightened public misgivings about the cyber security systems banks need to put in place, what with several highly publicised incidents of late about ‘ATM card cloning’ and theft of persol information, uuthorised access to bank accounts and withdrawals and several other frauds. Banks have to spend to operate and maintain their ATM network, for which they have to charge customers. But customers in turn are worried about reports of ATMs 8-10 years old still running on Windows XP platform that is not being upgraded for bugs. RBI Deputy Governor SS Mundra while speaking at the annual Banking Codes and Standards Board of India conference last month, spoke about the need for a comprehensive policy to ‘limit the liability of customers’ due to increase in complaints relating to uuthorised or fraudulent transactions. He was also forthright in warning banks not to misuse their autonomy and ‘levy usurious service charges, deny services or drive away the common man’. In this context, he said that an aggrieved customer can very well move his/her account to another bank. But the question is where will the customer go if all banks operate in cartel-like fashion as per some unwritten understanding? It is likely that the RBI will keep a sharper eye on banks over mis-selling third-party products like insurance and mutual funds, violation of KYC guidelines and other questioble practices. Many bank customers complain they are ‘billed in stealth’ for a plethora of increasing charges, that the opt-out clauses in many schemes are hardly noticeable. Borrowers meanwhile are left clueless about how their loans are reset due to change in interest rates — they complain that any benefit due is not passed on to them immediately by banks. In a country where most bank customers lack fincial literacy, it is upto the Reserve Bank to play a more proactive regulatory role in the coming days to safeguard the interests of bank customers.