RBI calls for more reasonable penal, service charges

08 Nov 2010

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The Reserve Bank of India (RBI) has asked banks to be more transparent and levy reasonable penal charges. This comes on concerns over the increasing complaints by customers of steep charges levied by banks even with marginal dip in minimum balance in savings accounts.

Some banks require a minimum balance in savings account on a quarterly basis to be as high as Rs 10,000, with penalties running up to Rs750, excluding taxes.

Following a meeting with bankers after its mid-term policy review last week, the central bank has stressed the need for banks to ensure fair service charges. According to the central bank it has been brought to its attention that customers have been penalised on flimsy grounds.

According to a central bank official there have been cases where banks have charged over Rs500 even if account holders have fallen short of the minimum amount by Rs100.

Though bankers have argued that customers have been made aware of the rules and penalties on maintaining a minimum balance at the time of account opening, RBI says banks often hike the minimum balance without the customer even being aware of it.

The central bank had constituted a committee to look into the issue of banking services to small and retail customers including pensioners.

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