Mumbai: If you thought state-run banks charged less for customer service than their private sector counterparts, a survey done by the Reserve Bank of India (RBI) has produced a surprise.
For services such as mailing a cheque book, monthly accounts statement or collection of outstation cheques, most public sector banks charge their customers more than even foreign banks do, according to the RBI survey.
Hidden surprise: A file photo of Punjab National Bank. An RBI survey has found that public sector banks charge their customers for delivery of cheque books, monthly statements and collection of outstation cheques
“We carried out this exercise as customers complained that banks are going overboard with courier and postage charges,” said an RBI official, who did not wish to be named. “Our aim is to ensure that charges are reasonable and are decided by market forces and competition. For banks, interest should be the main source of income and not these service charges,’’ he added.
Most public sector banks recover actual costs from their customers for delivery of cheque books and account statements at their homes and some even charge extra. For instance, Chennai-based Indian Bank charges Rs23 to send a statement to its customers’ homes in addition to the actual postage. It even charges Rs12 for emailing a statement.
In contrast, leading private banks such as ICICI Bank Ltd, HDFC Bank Ltd, Axis Bank Ltd and Kotak Mahindra Bank Ltd provide such services free. Even Citibank NA, Hongkong and Shanghai Banking Corp. Ltd (HSBC) and Standard Chartered Bank do not charge a fee to send statements to customers’ homes.
When it comes to collection of outstation cheques, State Bank of Bikaner and Jaipur, a State Bank of India associate, levies Rs55 as a courier charge on customers. The fees public sector banks charge for the service vary according to the denomination of cheques. Private banks, however, levy uniform charges irrespective of the value of a cheque.
In the past, the central bank had prepared an internal report on “reasonableness of bank charges” that classified providing cheque books, pass books or bank statements, and automated teller machine (ATM) cards as basic services. Collection of local and outstation cheques must also be treated as a basic service, the report said, sending a signal to commercial banks on what it deemed to be essential and low-cost services.
“The central bank is not here to prescribe any rates,” said the RBI official. “However, we will, at regular intervals, ensure that they are reasonable. We believe in moral persuasion. If banks don’t get the message, we could look at issuing a notification, like we did in the case of ATM services,” said the RBI official.
The central bank recently told banks to cap charges for withdrawal of cash from the ATMs of other banks at Rs20 per transaction, from Rs55 earlier. The new rates took effect from March onwards. RBI also suggested that cash withdrawals from any bank’s ATM should be made free from April 2009. Balance enquiries at all ATMs have already been made free despite protests by some banks.
For the RBI circular on courier charges, visit here