Mr.KP is presently a customer of a popular foreign bank. He was earlier banking with a nationalized bank. However, since he was not very happy with the bank services, he opted for a shift. He felt that he had made the right decision. However he never took into account the important factor whilst deciding the switch that is the fees levied by the foreign bank on the regular banking services that it offered to the customers. He was therefore in for a rude shock when he realized that he was charged Rs150 for acquiring a duplicate account statement, when his earlier bank would have charged him approximately Rs30 for the same. He had no idea as to why for the same service, two banks were levying different charges.
In its Annual Policy statement for 2006-07, The Reserve Bank of India (RBI) has proposed a scheme to ensure that banks do not levy unreasonable charges for the products and services that they offer. Hereâ€™s taking a look at why such a scheme is needed.
BANK EARNINGS OR CONVENIENCE COST:
The various products and services offered by banks today definitely make life more convenient. However convenience comes at a cost. Most of the popular products and services provided by banks including check books, demand drafts, duplicate account statements, ATM and credit/debit card related services, stop payment, account closure services, etc are bundled with charges.
IRRATIONAL CHARGES BANK TO BANK:
Banks may have the right to charge fees for the products and services that they offer but the fact is that these charges are not rationalized across different banks which leads to uneasiness even amongst the most generous bank customer.
It is important to note that banks levy higher sums of money on customers for certain services in spite of the low transaction cost involved at their end in providing the same. For instance, while banks pay a mere 50p to the central bank for clearing outstation checks from metros they normally charge the customers, for clearing anything between Rs25 and Rs150 per check.
Even more disturbing is the fact that most customers grope in the dark and have no clue as to why they are charged exorbitantly when a similar service is offered by another bank at a much lower cost.
The RBI in its notification recently, advised banks to adhere to the â€˜Fair Practices Codeâ€™ and make charges â€˜reasonableâ€™. As per the central bankâ€™s directive, though the decision to stipulate charges is at the discretion of the individual banks, they need to ensure that these charges are consistent with the cost of providing the services.
Moreover, all banks are required to display and regularly update the details of various service charges on their website as well as at their branches, in a pre-defined format as finalized by the central bank. This will enable customers to have a greater insight on the costs involved when they avail of the various services provided by the banks.
The RBI has also extended the Banking Ombudsman Scheme (set up to address bank customersâ€™ complaints), to include deficiencies in providing services assured by banks and the levying of charges without prior intimation to the customers. So, if you are not satisfied in terms of the quality or the charges while availing a particular service, you can file a complaint with central bank under this scheme.
While opting for any banking product or service, confirm the charges attached to it from your bank. Keep a watchful eye on all the account/card statements that you receive and ensure that you havenâ€™t been levied any extra charges. If you notice any discrepancies in these charges or fees, make sure you bring it to the notice of the bank and get it waived. â€˜The customer is kingâ€™, says a popular quote. Ensure you feel like one while dealing with your bank!
Â· Charges levied on customers for banking services vary significantly across banks.
Â· Charges levied by banks for services are not in sync with the cost incurred by them for offering the services.
Â· Most customers are unaware of the charges levied.
Â· If you have a grievance with your bank, you can lodge your complaint with banking Ombudsman.
Â· As a customer, you should confirm the charges attached to a particular banking product or service before availing of the same.