The Hindu : Business : Bank service: no free lunch

Online edition of India's National Newspaper
Thursday, Apr 22, 2004

Business

Business

Bank service: no free lunch

By Our Special Correspondent

CHENNAI, APRIL 21. Time was when banks fell head over heals to woo deposits. Post-liberalisation and following the advent of new generation private banks, the industry appears ever keener to make its customer debt-ridden. How else can one view the newly found enthusiasm among banks, especially the new generation ones, to discourage deposits by levying assorted fees on a deposit-holder?

ICICI Bank, for instance, has announced revision of service charges for non-maintenance of minimum balance. Further, there are myriad transaction charges. All these keep one wondering if banks have turned customer unfriendly.

ICICI Bank has announced an upward revision of service charges for non-maintenance of minimum balance for savings account. For savings account with quarterly average balance of more than 50 per cent of the stipulated balance, the service charge is increased to Rs. 750 from Rs. 250. For savings account with quarterly average balance of 50 per cent of the stipulated balance and less, the fee is upped to Rs. 750 from the existing Rs. 500. Besides these, there are transaction charges for re-order of cheque book at Rs. 2 per cheque leaf, for cash transactions at the branch (at Rs. 50 per transaction after allowing three transactions free in a quarter) and for cash transactions at the ATM (Rs. 25 for a transaction after allowing six free transactions in a quarter). Even some PSU (public sector undertaking) banks have now started discouraging cash withdrawals below a minimum amount at branches and divert these to ATMs.

While encouraging the use of debit cards, banks charge an annual fee after giving it free the first year. More often than not, banks enter into some sort of an ATM sharing arrangement among themselves. This, no doubt, helps a customer withdraw money from any nearby ATM. The usage of other banks' ATM will mean that a customer will have to pay transaction charge. In the case of ICICI Bank, a `nominal charge' of Rs. 20 per transaction for cash withdrawal is levied. There is no free lunch, so goes an adage. Well, there is no free service. So says these banks.

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