Be aware of higher charges of banks w.e.f 1st April 2017

In the past few weeks, we have seen banks either introducing new charges or hiking the existing ones sharply. While many customers complain of banks robbing them with higher charges, those from the banking industry say customers need to pay for the services they enjoy. Customers’ pain point, however, is not just the fee, but the non-transparent, arbitrary manner in which charges are being levied.

Banks’ unique advantage of deducting money directly from bank account also worries customers. Unlike other service providers', banks have a higher leverage over customers. They enjoy an unfair advantage. Surprisingly RBI has allowed banks to levy charges. It is tied up with systemic issues such as NPA and has not yet realised the mood of the customers.

How can you deal with it? 

Minimum Balance

Several big banks, such as the SBI, require customers to maintain a minimum account balance or pay a penalty.  The minimum balance implies average minimum balance over a period; usually a quarter or a month.  For a person earning a monthly salary of Rs 30,000; a minimum monthly average balance of Rs 1,000 can be maintained by leaving the salary in the bank just for a day. This may not be a big issue for most people, but would pinch those with a lower surplus.

Cash Handling

Customers should bear in mind that the higher cash transactions in a month limits are the combined limits for deposits and withdrawals; at the bank’s branch, ATM or third-party ATM. Customers will be allowed around 10 free transactions per month, including noncash transactions such as checking the account balance at an ATM.It is time we organise no of transactions. 

Other Charges

Customers also pay for SMS alerts, debit and credit card, online transactions: NEFT, RTGS, IMPS, issuing extra cheque leaves, issuing a demand draft, besides levying penalties in case of a bounced cheque or insufficient funds in the case of an ECS mandate. In the wake of the banks justifying their service charges, there are some suggestions;

How can you avoid above mentioned charges?

1)      Increase the use of Debit card/ Credit card and mobile wallets in a smart way

2)      Maintain minimum Balance in the Bank Account(s) 

3)      Use Cash alternatives – Liquid Mutual Funds.Take the advice from an Investment Adviser, preferably SEBI Registered Investment Adviser for this.

4)      Don’t  ignore bank intimations like SMS and e-mail – Check it regularly

5)      Scrutinise the Bank statements /Credit card statements to find details of charges

6)      Finally, take up with the Bank for unreasonable charges and escalate to higher authorities and RBI if required.

Courtsey: ET Wealth dated 20th March 2017

Last modified on Monday, 20 March 2017 12:04

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.

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