ICICI bank to charge Rs.5 per 1000 from customers depositing cash.

From April 1, 2015, banking in India is going to be more expensive than ever as you are charged money to withdraw and deposit your own money. Despite indications to the contrary, the government continues to look the other way as banks exploit customers. From next week private banks are going to hike up their charges by upto 60%.

If you read this blog, you know that I sent a letter to the Honorable Prime Minister, Mr Narendra Modi in May last year, when he took charge of the top chair. The letter put forth over 30 suggestions on how to prevent Indian banks from profiteering at the cost of customers, suggestions on making India entrepreneur friendly, introduce tax reform and capital market reform.

So I was delighted when the PMO turned my letter into a petition and then I received a reply from RBI, a second reply from RBI and a reply from SEBI. What was even more encouraging was when some of my suggestions were implemented while some others came close to being implemented. In November 2014, the RBI asked banks to lower their bank charges for customers not maintaining a minimum balance. It said 'charges should be directly proportionate to the extent of shortfall observed'. This means if you are Rs.100 short of the minimum balance, you can't be charged Rs.300 as bank charges.

In February this year the RBI announced that credit card companies would be asked to bring down interest rates in line with other financial products with similar risk. I had asked for this. Then the government announced that it is considering making credit card usage mandatory for bills in five star hotels where the amount exceeds Rs.5000. This too is something I had suggested.

However, this latest development is a shocker. Private banks have been allowed to hike up their charges by upto 60%. From April 1, 2015.

Banks including ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank are going to increase charges and penalties from April 1, 2015.

I quote from the news report (The formatting of text is mine) published in Business Standard newspaper:

ICICI Bank, India's largest private lender, will charge Rs 100 more for non-maintenance of average monthly balance in metros and Rs 50 more in semi-urban areas. The bank will also charge cash deposits by customers or customer representatives at branches not in the city where the account is opened. While it will levy Rs 5 for every Rs 1,000 deposited at counters, deposits in machines will be free for the first transaction every month; Rs 5 for every Rs 1,000 will be charged from the second transaction.

From April 1, HDFC Bank will charge Rs 75 for every 25-page chequebook beyond the first. It will charge Rs 150-600 for non-maintenance of minimum average monthly balance for urban customers (minimum average monthly balance Rs 10,000) and Rs 150-300 for semi-urban customers (minimum average monthly balance Rs 5,000).



Axis Bank has increased service charge for the 'Prime Plus' account segment from Rs 250 a month for non-maintenance of minimum balance to Rs 5 for every Rs 100 shortfall compared to the average monthly balance requirement or Rs 350, whichever is lower.

Kotak Mahindra Bank has raised the charges for non-maintenance of average monthly balance in 'Edge' savings accounts. If the average balance is less than the required amount but more than half of it, a charge of Rs 300 will be imposed (earlier Rs 250). If the average balance is less than half the required amount, the bank will charge Rs 400 (against Rs 350 earlier).

This flies right in the face of the claims of inclusive banking. I remember speaking with some of my friends from Bihar and North East India who spoke about having to pay bribes to withdraw their own money from their bank accounts. Now it almost seems like these amounts are being made official and banks are being given a free reign to exploit customers to the hilt.