No Change in Service Charges Levied by Banks – FM

Recently, several media reports were stating a steep increase in service charges levied by some Public Sector Banks (PSBs). These reports provide that Bank of Baroda will start charging its customers for deposits and withdrawals made beyond the prescribed limits from 1st November 2020. The names of other banks like the Bank of India, Axis Bank, PNB and Central Bank were also stated in these reports. The Ministry of Finance issued a clarification on Tuesday regarding the factual position of these reports.

The clarification issued by the Ministry of Finance states that there are no service charges applicable to the 60.04 crore Basic Savings Bank Deposit (BSBD) accounts. The BSBD includes the 41.13 crore Jan Dhan accounts which belong to the poor and unbanked segments of the society. These accounts have free services as prescribed by the Reserve Bank of India (RBI).

There is no increase in the service charges on regular savings accounts, cash credit accounts, current accounts and overdraft accounts. The Bank of Baroda made some changes w.e.f. 1st November 2020. Though Bank of Baroda didn’t increase the charges, it made changes regarding the limit of free cash deposits and withdrawals. The Bank of Baroda reduced the number of free cash deposits and withdrawals from 5 to 3 each per month. However, there was no change in the charges for transactions above the prescribed limit of free deposits and withdrawal.

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The clarification issued by the Ministry of Finance stated that the Bank of Baroda has informed that they will withdraw the changes due to the current COVID-19 situation. Further, there is no increment in the charges by other PSBs recently. 

As per RBI guidelines, there is permission for all banks which include the PSBs to levy charges for their services in a transparent, fair and non-discriminatory manner. Although the banks have such provision under RBI guidelines, there is no increase in the service charges by other PSBs. The other PSBs have given intimation to the Ministry of Finance that they do not propose to increase bank charges in the near future due to the COVID-19 pandemic situation in the country. 

The clarification by the Ministry of Finance comes as a relief to the account holders of the banks. In this pandemic situation, people rely on banks for transactions if any crisis arises. Expenses are more, and thus more transactions of deposits and withdrawals take place. At such a time if the bank increases its service charges, it would affect the account holders. 

The Bank of Baroda issued changes in the reduction of the limit on withdrawals and deposits. Realising the situation, it declared to withdraw such changes. Now, with the official clarification by the Ministry of Finance, the account holders can be assured that there will be no changes in the service charges levied by the banks.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in