SBI Collected UPI Transaction Charges from BSBDA Accounts Using Board Approval on Service Charges?
Moneylife Digital Team 24 August 2023
While the Union government and Reserve Bank of India (RBI) insist that unified payment interface (UPI) transactions are free, the State Bank of India (SBI) had collected Rs17.70 for every UPI transaction or Rs254 crore from basic savings bank deposit account (BSBDA)-holders between April 2017 and September 2020. Like other public sector banks (PSBs), SBI was also levying charges, indirectly taking advantage of approval by its board of directors on service charges beyond a certain number of free debit transactions. This has come out in a recent ruling by the central information commission (CIC) on a second appeal filed under the Right to Information (RTI) Act by professor Ashish Das from the Indian Institute of Technology (IIT) Bombay. 
In an order, Saroj Punhani, central information commissioner, says, "...while the central public information officer (CPIO of SBI) submitted regarding a charge of Rs15 plus goods and service tax (GST) on ATM withdrawals, the subject matter under reference is about a circular allegedly stipulating 'Rs17.70 (inclusive of GST/value-added tax-VAT)' as service charge. The CPIO has neither refuted to the existence of such a circular or lent clarity to the anomaly caused in the matter by the mention of two different service charges and two different contexts."
"Now, since the request of the appellant (Prof Das) is restricted to the approved board minutes as sought for at point no.3 of the RTI application, considering the fact that the policy decision implemented by the (SBI) board is beyond any reasonable doubt a matter concerning larger public interest, the CPIO is directed to revisit point no.3 of the RTI  application in light of the provisions of Section 4(1)(c) and 4(1)(d) of the RTI Act," the CIC order says.
At point3 in his RTI application, Prof Das asked for information about "Restricting only to the specific matter that requires the board of directors of SBI (as per RBI mandates) to approve any service charge after having consciously ensured the reasonableness in the fixation of the charges, please provide only that part of the specific signed minutes of the board of directors of SBI, wherein the board approved the fixation of service charges at Rs17.70 (inclusive of VAT/ GST) for every withdrawal, beyond four a month, in a BSBDA." 
RTi, RBI, Bank charges, Service charges
As per the 'master circular on customer service in banks', RBI mandated banks on ways and means of fixing service charges and ensuring the reasonableness of bank charges. RBI has mandated that while fixing service charges for various types of services, banks should ensure that the charges are reasonable and are not out of line with the average cost of providing these services. Banks' board of directors have been vested with the responsibility to ensure the reasonableness of such charges. RBI mandates that the principles for ensuring reasonableness in fixing the service charges should include for basic services rendered to a special category of individuals (such as individuals in rural areas, pensioners and senior citizens), banks will levy charges on more liberal terms than the terms on which the charges are levied to other individuals. For the basic services rendered to individuals, banks will levy charges only if the charges are just and supported by reason. The banks will levy service charges ad-valorem only to cover any incremental cost and subject to a cap.
During the hearing, the CPIO of SBI submitted that the relevant RBI circular stipulates four withdrawals free of cost and beyond that, withdrawal is chargeable at the rate of Rs15 plus applicable GST. He further clarified that these charges are only for cash withdrawals and not UPI transactions, as opposed to what is being alleged by Prof Das. The CPIO also explained the rationale behind imposing service charges for ATM withdrawals from customer service points on BSBDA holders.
Prof Das argued that the CPIO of SBI is tendering an incorrect statement as the circular he has referred to refers to all debit transactions and not cash withdrawals specifically. He says he has no problem in accepting that customer service points are supposed to be paid with a hefty commission amount, but his concern is the service charge applied for UPI transactions for which he has sought to know the rationale or reason based on which the board approved the application of the averred service charge.
"Based on the above, it now appears that the SBI board did not approve the charges of Rs17.70 for UPI withdrawals but only cash withdrawals. The board had considered withdrawal charges of Rs17.70 only for cash withdrawals, but the Bank charged the same Rs17.70 even for UPI transactions. In other words, the Bank was not authorised to charge Rs17.70 for every UPI transaction from June 2017 through December 2019. Though SBI has stopped charging since October 2020, from April 2017 to September 2020, the Bank collected over Rs254 crore towards at least 14 crore UPI transactions by charging Rs17.70 for each of these transactions done by the poor BSBDA customers under the PMJDY. On directions from the government, SBI has returned just about Rs90 crore for the charges imposed for UPI or Rupay transactions done in the year 2020, thereby unjustifiably withholding the bigger chunk of at least Rs164 crore with itself for charges imposed from June 2017 to December 2019," he says. (For more details on these numbers refer to the IIT Bombay Technical report)  
"Keeping in view the larger public interest with over 110mn (million) BSBDA-holders that had opened their accounts under the government's PMJDY, it warrants for a clear understanding and rationale contained in the documented minutes of the board of directors of SBI that allowed imposition of such unreasonable charges at Rs17.70 per withdrawal, even for the much promoted mobile-based BHIM-UPI digital transactions," Prof Das says.
He also highlighted RBI's inspection report on Canara Bank, where the lender neither obtained approval nor any note from its board showing that the board ensured the reasonableness while fixing charges. "This information resulted in Canara Bank refunding to their customers the excess money collected (unauthorised service charges) for nearly two years."
As reported by Moneylife, on 30 August 2020, the central board of direct taxes (CBDT) issued an unequivocal circular to clarify that under section 10A of the Payment and Settlement Systems Act, 2007, all electronic transactions will be free. CBDT said any such charge would attract a penal provision and asked banks to refund all charges collected after 1 January 2020. 
Accordingly, on 15 April 2021, SBI said in a public statement that it had stopped collecting charges and had refunded over Rs90 crore collected on digital transactions since 1 January 2020 (Read: Under RBI's Lax Attitude, Banks Face No Consequences for Flouting Rules).
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