Article

Services Banks Charge You For
August 20 , 2013

Many services provided by banks are not free; you are charged for them. Termed service charge, these are disclosed on the bank's website and also on notice boards but few people are aware of the fees they pay. Transaction related charges are applied upfront but other fees might come to notice only if one scrutinizes passbook entries.

Charges on cheques

At least one cheque book usually having 25 leaves are issued free. Cheque books exceeding this in a quarter or year if availed are charged Rs 25-50.

If you have issued cheque to someone but decide not to make payment you can issue Stop Payment instruction. This is done for a fixed charge of about Rs 100 and a little more for a series of cheques. Some banks don't charge for this if done through net banking.

Apart from these there are the usual transaction charges for cheque collection when you present a cheque you receive for payment. Local cheque clearing is mostly not charged, outstation cheques are charged at rates ranging from Rs 25 to Rs 150 depending on the amount and mode of clearing.

These charges are fairly known because they are charged upfront.

RTGS/NEFT charges

For outward funds transfer through NEFT or RTGS a fee is levied. For NEFT a fee of Rs 5 is charged for amounts up to a lakh and increases above that. Above Rs 2 lakhs this is about Rs 25. RTGS threshold is Rs 2 lakhs and a fee of Rs 25 is charged.

DD charges

Issuing Demand Draft (DD) against both cheque and cash are charged. Some banks charge higher for issuing DD against cash. Depending on the transaction amount DD issuance charge ranges from Rs 25-150. DD cancellation or reissuance is charged between Rs 50-150.

DD charges over net banking or phone banking transactions are significantly lesser.

Cash transactions

Cash deposit and withdrawal are charged beyond free limits or certain amounts. Some banks have the practice of distinguishing between home branch and non-home branch customers for these however RBI has restricted from applying same charge on cash transactions for all customers in CBS bank branches.

Cash remittance attracts fee charged as a percent of the transaction amount.

SMS alerts

Yes, some banks even charge for mobile banking facilities like SMS alerts to the tune of Rs 15 per quarter.

ATM/Debit card charges

ATM cards are presently issued free of cost. Unlike credit cards there is no membership fee for ATM cards. If number of transactions at ATMs other than the same bank's exceed that prescribed (present 5 a month) then a fee is charged for each such transaction. Some banks do not charge or charge lesser for non-financial transactions like checking account balance at other ATMs even beyond the free number while others do. If ATM transaction fails due to lack of enough balance in account your bank can levy a penalty for each such transaction. Besides if you lose the card or want a duplicate PIN there are charges for issuing these again.

Some banks issue ATM cum Debit cards. Debit cards have an annual membership fee usually starting from the second year. Ticket booking on IRCTC or for Air India using debit card is charged a fee of Rs 10 or Rs 50 respectively.

Penalty charges

These are attracted only if you default on certain commitments you made while signing up for an account. Every time a cheque bounces, both in case you are writing it or presenting it for payment, you are levied a penalty fee. If minimum average monthly balance (or quarterly balance, depending on bank) is not maintained a penalty fee is levied. Some top private banks charge penalty per call on phone banking customers who avail facility of talking to an executive when minimum balance is not maintained. If your ECS debit mandate fails for lack of sufficient funds in your account a penalty is slapped.

RBI rules require banks to put up service charge list in a particular format on their notice boards in public view and prominently displayed on homepage of bank website. Few have the time or inclination to check them and most people are ignorant but some realize it on scrutinizing their passbook entries.

Inoperative account charges

If there are no deposits or withdrawals from your account for a whole year the account is deemed an inoperative one. Banks charge a recurring penalty on such accounts. If balance is account is less than penalty amount, it gets terminated.

If an account is closed before completion of a year a separate charge is levied.

Miscellaneous charges

When a customer verifying mandate is issued to the bank a fee could be charged to your account. Standing instructions you make could be levied a charged the first time.

Service tax

There is service tax of 12.36% on all charges mentioned above. This is levied by the central government and is same across all banks.

Summary

The list compiled here is not exhaustive; you might come across more charges. Perhaps you were under the impression that some of the above bank service fees are never charged for. To have a look at what your bank's charges exactly are click on link Service Charge and Fees of Banks. There are no free lunches in business, it's true.

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