A Moneylife online survey on banking service charges shows a growing sense of frustration among customers about the constant and stealthy increase in charges. But many respondents don’t even know about these charges!

Bank customers are frustrated at the ever increasing charges being passed on to them, sometimes with the knowledge, or sometimes keeping them in the dark. In addition to high inflation, escalating costs of health and education, the friendly neighbourhood bank, which promised ease, convenience and efficiency, is quietly springing ever-increasing charges on discerning bank customers. The findings of Moneylife’s survey on banking service charges explained exactly why banks get away with it.

We received 1,579 responses to the survey. About 93% of the respondents have more than one bank account; 40% have more than three bank accounts. A significant majority (67%) have an account in private banks and 57% in nationalised banks. This means that the respondents are educated, tech- and social-media-savvy persons, in the higher income brackets. About 8% have a foreign bank account and 8.5% have an account in a co-operative bank. Around 69% have regular savings accounts, while 31% are high-end, priority customers. Only 25% of the respondents have salary accounts with banks. Surprisingly, 1.2% said they have a no-frills account as well, while 14.6% operate a current account.
 

The demography of the survey is heavily skewed against the female customers, with 92.6% of the respondents being male. Also, most of the respondents who avail the banking facility are between twenty and sixty years of age.
 

A third of our respondents (32%) are in the 20 to 35 age group; 26.6% are between 36-45 years, another 26.3% are between 46 to 60 years. Senior citizens, aged between 61-70 years and 71 years and above, constitute 11.5% and 3.6% of the respondents, respectively.

While a large discerning group is aware and angry about the slew of new charges, a shocking 60% of respondents were unaware of various charges and have never checked if their bank announces them transparently. Over 71% of account-holders do not want to change their bank for various reasons—and this is the answer to why banks are able to hike bank charges with such impunity.

We found that customers of private banks and nationalised banks were more aware of costs and charges, while a majority of customers in the two extremes—foreign banks and cooperative banks—responded with a ‘don’t know’ on most cost-related queries. Clearly, account-holders in foreign banks do not bother to check, while those of co-operative banks probably don’t avail of many of these services. Our own research shows that all three categories of banks (foreign, nationalised and private banks) are not very forthcoming about the entire spectrum of bank service charges such as the annual debit card fee, automatic teller machine (ATM) transaction charges, national electronic fund transfer (NEFT), real time gross settlement (RTGS) charges, SMS alert fees, minimum balance requirement and penalties.
 

Banks levy a slew of service charges on the customers like annual fee for debit card or ATM card, and for a duplicate pin number for the debit card or ATM card number, or for a new card in case of loss or damage. About 43.6% of the customers in nationalised banks reportedly pay between Rs100 to Rs500 annually for the debit card and ATM card. The figure is 17.55% and 14.56% in case of the foreign banks and co-operative banks respectively. Our survey has revealed that often people do overlook, or ignore certain charges, which are slyly introduced by the banks: for example, charges levied after the sixth transaction at ATMs. More than 50% of the respondents were simply unaware of the amount charged in these cases.

There are a plethora of charges that banks levy on various issues. But the most startling insight of the survey is the fact that in spite of not being fully satisfied with the services of their individual banks, majority of our respondents refused to change the bank. Our survey shows that about 36% of our respondents do not consider changing their banks because they have their salary linked with the bank and a whooping majority of 49% consider it as too much trouble to change the bank account.

In the cases of returned cheques, 48.8% of the customers in foreign banks and 46.5% of the customers in cooperative banks do not know that they are charged. Anywhere between Rs50 to Rs500, with the exception of IDBI Bank. The story is the same with the Electronic Clearance Service (ECS) and National Electronic Money Transfer, where the customers are unaware of the amount charged from them. Taking a cue from the strong campaign by Moneylife magazine, along with bank unions, the RBI assured us that it would facilitate electronic transfers as prescribed by the Damodaran Committee. An astounding majority of 65% of the respondents in our survey never knew the banks have account closing charges, especially if the account is deactivated within a year.

In the recent past, Moneylife has written about various charges levied on the customers by the banks.