With SBI taking lead, ‘Any time banking’ too is going for a toss

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’)

Comments
AUROTTAM KUNDU
8 years ago
I posted my queries to the official State Bank of India page on Facebook.Their replies were not only ridiculous but also impractical.They are asking me to use a smart phone for checking balance and not to visit the bank after 10 visits.Now that I don't have a smart phone,what should I do?
AUROTTAM KUNDU
8 years ago
https://http://www.facebook.com/StateBankOfIndia/photos... pls visit this to see State Bank of India's response
Aniruddh Patankar
8 years ago
Please tell me: what happens if my bank's ATM is out-of-order (a very common occurrence) and I am forced to transact through another Bank's ATM? Do I still get penalized even though its'not my fault?

Aniruddh Patankar
SuchindranathAiyerS
8 years ago
Like all products and services "Indian" including constitution, laws and governance, "Anywhere Banking" was an enticement. Like freedom, equality, secularism, independence and so many other things, to be spit out like Gutka Paan once its purpose has been served.
Gyan Mitra
8 years ago
Maybe the government wants to drive away people from banks, make poor people think of alternate ways to manage their money & investments. I'm positive that non conventional systems will rise to the fore.
pravsemilo
8 years ago
We should protest by doing a mass withdrawal every month from other bank's ATM - possibly upto the 3 free transaction and then on start using SBI's ATM.

Why should we be loyal to it, while it doles out loans to corporates?
Parimal Shah
8 years ago
Although you have a point, the limits for free transactions is sufficient for average person. The limits are essential in view of the Jan Dhan Yojana that will otherwise put huge strain on the ATMs and other software dependent transactions.
-Parimal
Veeresh Malik
8 years ago
It does appear as though banks in India are well underway in their efforts to not just recover the amounts that they have lost under NPAs from Wilful Defaulters but are also preparing to build more resources for more NPAs and Wilful Defaulters. Truly, achche din are on us, very soon we may get less than 100 rupees to our rupees when we withdraw cash or transact using any instruments too?

All this when the Delhi metro gives a 10% discount for using smart-cards.
Vaibhav Dhoka
8 years ago
This may give rise to multiplication of one account i.e a loyal customer may open account in more than one branch to avoid charges.
Vaibhav Dhoka
8 years ago
This may give rise to multiplication of one account i.e a loyal customer may open account in more than one branch to avoid charges.
Bhupesh
8 years ago
Oh! SBI is going charge for Mobile and Netbanking also? Will there be non peak hour discount? :)
SUNIL KUMAR HEMNANI
8 years ago
SBI has since long put a limit on the number of times a customer can access his locker.So once that w as in place the rest was just waiting to happen .
Swaminathan Ks
8 years ago
I do not understand, it is our money and they charge us for using that. If this continues, people will go back to olden days of dealing in cash for everything and we will end up with more black money in the country than in foreign banks. On one hand the government is trying to streamline by opening bank account for all and at the same time increasing the charges and discouraging their own objective.
Ram
Replied to Swaminathan Ks comment 8 years ago
Well said. These banks unable to handle npas, salary demands by their own unions started fleecing sb holders. That too from public bank, its nothing but govt wants to charge middle class for its never ending so called welfare programms.
Free Helpline
Legal Credit
Feedback