SBI, the country’s largest lender, has limited free transactions like ATM, net banking and branch banking, depending on the monthly average balance the customer maintain in her savings bank account. ‘Anywhere banking’ has already gone haywire, and with SBI taking lead, ‘Any time banking’ too will go for a toss

The days of free banking are getting over. As the saying goes, ‘there's no such thing as a free lunch’. It all began with the recent decision of Reserve Bank of India (RBI) to allow banks to restrict the free usage of automated teller machines (ATMs) even to their own customers. This resulted, with many banks promptly deciding to charge for ATM transactions beyond the stipulated five transactions per month. RBI possibly overlooked the fact that ATMs have benefited banks more than their customers have because it helped banks to reach out to people at a much lesser cost than brick and mortar branches. This also helped banks to increase their current and savings accounts (CASA) deposits substantially and these are low cost funds for the banks.   

Now, State Bank of India (SBI), the country’s largest lender has gone beyond charging for ATMs.

According to the new rules, even if you visit the SBI branch and withdraw cash from your account, you will have to pay a fee of Rs20 if your total debit transactions per month, excluding ATM withdrawals, exceed the number stipulated by the bank. It is not clear as to whether this would include all debit transactions including the electronic clearing system (ECS) debits routinely allowed in payment of electricity, water, gas and telephone bills as per the standing instructions of the customer as the rules are silent in this regard.

It does not end there. Even if you are tech-savvy and do not visit the branch, you are not spared. If you use the internet or the mobile banking route to do your banking transactions, you still will have to pay these charges, if your total debit transactions per month exceed the stipulated number of free transactions. In addition, these freebies are linked to the average balance you maintain in your savings bank account every month. The lower the average monthly balance in your account, lesser the free transactions you are entitled to.

All these charges are over and above many other charges payable by you for simply keeping your hard-earned money in savings account with a bank. These additional charges include annual fees for ATM-cum debit card, fees for cheque leaves beyond a certain number, joining and annual fee for credit card, and most of the banks even charge for sending SMSs for transactions alert conducted in your account.   

SBI, the state-run lender, has since revised charges for all type of transactions in the saving bank (SB) accounts of all their customers from 1 November 2014. They have categorized the customers according to balance maintained in the accounts and allowed free transactions according to their loyalty to the bank. Even if you have a few lakhs in fixed deposit with the bank, it makes no difference, as what matters is the balance kept in your SB account, where you get an interest of only 4% per annum at present.

The only exception to the rule is that if you maintain a minimum average monthly balance of over Rs1 lakh in your savings account, you are eligible for unlimited free transactions under all types of banking operations.

To minimize your visits to the branch, another attraction is that if you do not visit the branch during a month, you are eligible for nine free transactions at SBI Group ATMs, i.e. one way interchangeability is allowed between branch transaction and their own ATMs. If you are banking with SBI, have a look at the table below, take your pick and decide where you want to be.
 
Source: http://www.sbi.co.in/portal/web/services/service-charges-w.e.f.-01.11.2014

With the lead given by SBI, all other banks are bound to follow suit, and then banking will change forever from mass banking to class banking with all its ramifications. ‘Anywhere banking’ has already gone haywire, and now ‘Any time banking’ too will go for a toss. However, it does not appear to be the right time for these changes. Last week, Dr Raghuram Rajan, the Governor of Reserve Bank of India (RBI) said, “it is important to inculcate savings habit – the financial management habit among people so that they can handle money.”  The moot question, therefore, that begs an answer is, Have these restrictive practices come much ahead of their time?

(The author is a banking analyst and he writes for Moneylife under a pen name ‘Gurpur’)