Being Punished for Banking

First demonetization, then a slew of measures aka “Reforms” to push India for digital transactions and now this news. In the latest economic times article which provides the details of Reviewed charges by leading Indian banks goes on to show why you are basically being punished for Holding money in a Bank account. I sometimes feel even we are being punished because we are holding/creating assets. Is it necessary that we have to only hold digital currency and also do digital transactions. Worse so when you see the unrealistic charges that are to be levied I feel even worried to even being part of the Banking system.

Cash Transactions with Bank

  1. From April 1, SBI will permit savings bank account holders to deposit cash three times a month free of charge. Beyond that, it will charge Rs 50 plus service tax for every transaction. In case of current account, the levy could go as high as Rs 20,000.
  2. Axis Bank customers will be allowed five free transactions every month, including deposits and withdrawals. Above that, customers will be charged a minimum fee of Rs 95 per transaction.
  3. HDFC Bank will levy Rs 150 per transaction, beyond four free ones (deposits and withdrawals) each month.

What this basically means if you withdraw/deposits 500Rs you will be charged Rs50 in SBI, if you withdraw Rs1000 you will be charged Rs95 in Axis and worse is for middle and lower middle class who have been part of the Banking system or have become part of the Banking systems thanks to the Jan Dhan Yojana or because of the recent Demonetization all will have to face this steep charges and who knows would rather shy away from the Banking system because of such steep costs and be rather be part of the Black market which is the exact opposite effort that the Government is trying to achieve.

Now coming to Account Balance & ATM Withdraws:

  1. SBI account holders will also have to keep a minimum balance in their accounts, failing which they will be fined. The fine will be lower for rural areas. In metropolitan areas, there will be a charge of Rs 100 plus service tax if the balance falls below 75 per cent of the minimum available balance of Rs 5,000. If the shortfall is 50 per cent or less, the bank will charge Rs 50 plus service tax. SBI used to have such charges in 2012.
  2. For SBI Withdrawal of cash from ATMs will attract a charge of up to Rs 20 if the number of transactions from ATMs of other banks exceeds three and Rs 10 for more than five withdrawals from SBI ATMs.
  3. For non-home branches, ICICI Bank would not charge for first cash withdrawal of a calendar month and Rs 5 per Rs 1,000 thereafter subject to a minimum of Rs 150.

Now if you look at the surface such charges will look minor or something that we are used to paying at some level with such banks at any given point of time but it is the steep hike that SBI has levied that goes on to question is really banking an attractive option for millions of lower middle class and poor Indians where their monthly salary may be equivalent to the minimum balance that Banks expect us to maintain and whose weekly salary will even be less than what Banks are charging per transaction.

Its high time that to add the next 100 million to the banking system a major disruption has to be bought and such prohibitive costs that Banks charge has to forego. And its the apps like Paytm and Freecharge that I hope will bring the next big change into the Banking system. Until the Government/Banks starts to rationalize realistic charges for cash as well as online transactions it will be only true to say that Banking in India is a punishment that you have to endure.