SBI Cards to slap Rs118 fee on cheque payments from January 2020
28 November 2019
SBI Cards, a unit of state-run lender State Bank of India (SBI), has decided to impose a charge of Rs100 plus taxes (about Rs118) for all cheque payments, a move that could hurt thousands of customers.
The decision, seen as another way of extracting money from customers, comes after the lender experimented with levying charges for cheque payments on credit card dues below Rs2,000.
“With effect from 1 January 2020, a fee of Rs100 + taxes will be charged for payment towards your outstanding made by cheque, SBI Cards, the second largest credit card issuer in India, stated in a communication to customers.
Given SBI’s customer base of over nine million and footprint of over 130 cities in India, this decision is going to affect a lot of customers.
It may be noted that several of its customers, especially senior citizens and those who are not comfortable with using internet banking or mobile banking, prefer to use cheques for making a payment. Some also use post-dated cheques to schedule payment on a future date.
Almost every credit card issuer accepts payments through local as well outstation cheques. The turn-around time (TAT) for clearing local cheques is over three days; outstation cheques may take few more days for clearing.
While some of the card companies levy fee for cheque clearance, depending on the amount, SBI Card is the only one that has decided to impose a flat Rs100 charge for all payments of credit card dues through cheque.
The move to extract money from card customers numbering over nine million, is one way for making good loan losses running into thousands of crores for the state-run lender.
SBI Card was the first card company in April 2017 to start imposing a charge on payments made by cheques.
It may be relevant to note that on 25 October 2012, DD Maheshwari, undersecretary in the department of financial services had sent out a directive marked ‘most immediate’ to all chief executives of public sector banks (PSBs), which stated, “to discourage the use of physical/cash mode of transactions, all public sector banks are requested to consider charging a processing fee from the customer paying credit card dues either in cash or through cheque”.
HDFC Bank has recently increased such charges from Rs50 to Rs100 per transaction and has sent a communication to its customers in compliance with the regulatory requirement of giving a month’s notice.
The finance ministry’s 2012 directive was withdrawn and the ministry later issued a letter stating the letter, “stands withdrawn with immediate effect.”