Customers of Banks be aware!

We have to maintain Bank accounts, depend on Banks’ services and trust the Banks staff. But there is a caution; Trust but verify. Now a days, Banks services come loaded for the unsuspecting customers. Recently the service charges in many Banks been increased. If Banks charge for everything under your nose, you have every right to demand to be treated fairly. Caveat Emptor; Buyers be aware goes the maxim. Here are some specifics;

Home Loan

The home loan is a common experience for many customers. You are offered without a choice to take Life Insurance cover along with home loan. The cover gets gradually reduced with repayments. Banks may also lure you with an offer of a loan for the single premium. But remember that the EMIs get increased due to insurance premium and you have to pay interest on it.

What can you do?

It is better to tell the Bank that you have sufficient Life cover to take care of any untimely demise. If you do not have adequate life insurance cover, you can go for online term insurance and produce a copy  of the policy to the Bank with a request  not burden with further premium.

Personal Loan

The RBI has directed Banks not to charge a penalty for prepayment of floating rate Home loans but this is not applicable for personal loans. Banks discourage pre-payment of personal loans and impose stiff penalties.Some Banks do not permit to prepay the personal loan before one year.

What can you do?

Think twice on the need to take personal loan and consider all options on cash flow before availing it.

 Service charges and Processing fees

The Banks service charges and processing fees have been permitted by RBI to be at the discretion of the individual Banks. Many Banks have hiked it steeply.

What can you do?

You should enquire from your Bank about the details of various service charges. You can visit different Banks in your locality, compare the charges and change the Bank, if possible.

Banks Locker

Your Bank may ask you to buy an Endowment Life Insurance policy or a  Mutual Fund  for allotting a locker.

What can you do?

Banks charge annual rent for locker and you should demand the service as a Banking customer.You should resist buying Insurance or Mutual funds.

TDS on Bank Deposits

As per recent changes,TDS is deductible from Savings Bank(If  Interest is more than Rs10,000/), Recurring deposits and Fixed deposits. Banks may advise you to submit Form 15 G or 15H(Age more than 60 years).But if you are a  tax payer, the criminal liability comes on the depositor for submission of form 15G/15H.

What can you do?

Consult a  SEBI registered Investment Adviser or a chartered accountant before submitting the Form 15G/H.

Credit Card

Banks often sell credit cards with the promise that for the first year, they will not charge any fee. However, at the end of the first year, the card company sends an innocuous mail stating they will renew the card for a fee unless the customer explicitly rejects it. Even if you ignore this, the annual charges are debited to your account. If you do not pay it, you are reported as a defaulter to credit rating agencies like CIBIL.

What can you do?

  • It should advise the credit card issuer that the Reserve Bank of India has banned banks from offering such negative options and  take up with RBI, if required.
  • You should decline any unsolicited cards.

ATM and Cyber Fraud

Notice of any fraudulent transaction in your account should be immediately reported to the bank. Then the Bank is liable to prove its innocence in e-transaction fraud. If the bank is not notified, the maximum loss to you will be Rs.10000.But Post-notification; the customer is not liable to bear any cost.                                                

                                                                                                                                                  *Similar article in the Economic Times on 13th May 2015

Last modified on Wednesday, 10 February 2016 06:31

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

8 comments

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  • Sujata Aniruddha Sapkal

    posted by Sujata Aniruddha Sapkal

    Thursday, 02 July 2015 08:35

    Things we generally ignore or overlook while banking,are very significant and it is necessary to be informed and aware of such practices as a client.

    Report
  • Rohan

    posted by Rohan

    Monday, 08 June 2015 04:55

    Thank you for sharing your thoughts. I really appreciate your efforts and I will be waiting for your further write ups thank you once again.

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    posted by Anand

    Saturday, 06 June 2015 05:16

    I enjoy what you guys are usually up too. Such clever work and coverage! Keep up the good works guys I've included you guys to my blogroll.

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  • Nikesh

    posted by Nikesh

    Friday, 05 June 2015 13:47

    I agree with Mr. Rohit, One of the best personal finance blogs I have come across!
    Keep the good work!

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  • Rohit

    posted by Rohit

    Saturday, 30 May 2015 08:12

    One of the best personal finance blogs!

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  • Sonia Kaur

    posted by Sonia Kaur

    Wednesday, 27 May 2015 14:30

    Great pointers here!

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  • Rakesh

    posted by Rakesh

    Friday, 15 May 2015 11:43

    Very useful information...thank you sir

    Report

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