With the fiscal year coming to a close, it’s a good time to review the annual statement of your savings bank account. And if you haven’t kept a close watch round the year, don’t get surprised by a depleted bank balance. Banks deduct charges on various counts, which you may have ignored otherwise.
Like it or not, a forgotten automated teller machine (ATM), personal identification number (PIN) or failure to maintain your account balance, can pinch your pocket. In fact, the loss may look substantial if you put together all charges. Here are some of the factors that attract a charge. Some of these can be easily be avoided if you are vigilant enough.
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Non-maintenance of average balance
In almost every bank, you need to maintain a minimum average amount over a quarter or even a month. Since it is an average, sometimes you may not realize that you’ve breached the limit and gone below it.
Tip: Try and ensure that you keep maximum balance in your account for a few days. In most cases, it will take care of the average balance.
If you are careless enough to lose your original account statement, there’s a cost you will have to bear in case you want a duplicate statement. Most banks levy a charge for issuing these.
Tip: If you are technology- friendly, you can still save on the cost. For instance, HDFC Bank Ltd charges Rs 100 if you go to the branch for a duplicate statement, but just Rs 30 if you ask for it through Internet banking. Similarly, Citibank India issues duplicate statement free of cost through online banking, but charges Rs 100 at the branch.
You can’t avoid occasional demand drafts that you may have to attach with forms or applications. Since the charges are low, it may not even matter in such cases. However, if it’s a regular feature, it may be a problem. For instance, if you need to send money to your relatives regularly, you may not want to pay a sum every month.
Tip: Transferring money through other modes, such as National Electronic Fund Transfer, is far cheaper. In fact if the transfer has to take place between accounts of the same bank, it can be free of cost through an ATM.
In fact, demand draft charges depend on the mode of request. If you order a demand draft through online banking, call centre or ATM, the charges are less compared with a request made in the branches.
You get some cheque leaves free of cost on a quarterly, biannual or annual basis, depending on the bank. If you require more than what has been issued to you free of cost, you will have to pay a charge.
Tip: There are a few banks, including HSBC, Standard Chartered Bank and IDBI Bank Ltd, that do not charge anything for this facility.
All banks levy a penalty if a cheque, issued or deposited by a customer, is not honoured. The penalty varies according to the nature of dishonour of the cheque.
If a cheque issued by a customer is dishonoured because of inadequate bank balance, the penalty is higher. If a third person has issued a cheque in your name but has insufficient funds, you will still have to pay a charge, though a little less.
Generally, the penalty ranges between Rs 50 and Rs 750.
Tip: Before issuing a cheque, ensure there are enough funds in your account. Cross-check for any other mistakes you may commit while signing off a cheque.
ATM PIN regeneration
There is a fee for forgetting your PIN number, too. However, some banks will do it for you free of cost. The maximum charge is Rs 50.
Tip: While it is best to change your PIN to a number you can easily remember, even here the use of technology may save a few bucks for you. For requests on ATMs or online, some banks charge less.
Every time you make a stop payment request, a small amount gets deducted from your bank balance.
Tip: The obvious thing you can do is make sure what you are doing when issuing a cheque.
However, the more the number of such requests, the higher will be the charges in most cases. For instance, State Bank of India charges Rs 50 for the first three stop payment requests each. Make more than three such requests and the charge will go up to Rs 200 per mistake.
Some banks, such as Citibank, do not charge for online requests, but will give you a Rs 100 bill for a branch visit.
Outstation cheque collection
All banks have a charge for outstation cheque collection for sending the cheque to the branch from where it has been issued. The fee is Rs 50-200.
Though with the introduction of core banking solution (CBS) this particular charge has become irrelevant to an extent, it still exists for branches where the system hasn’t been introduced.
Says C.M. Khurana, general manager, Oriental Bank of Commerce, “Banks nowadays, no longer send the cheque for verification to its original branch as most of branches are CBS networked. Hence, this charge has lost some of its relevance. But if the branch is located in a remote area and is not linked to CBS, banks levy the same.”
If you have too many accounts due to frequent job changes and want to close some of them to cut the clutter, you will have to pay a charge to close each account. Banks generally levy a closure charge if the account is closed within six months to a year of opening.
Graphic by Yogesh Kumar/Mint