India’s largest state-run lender State Bank of India (SBI) has revised service charges for cash withdrawals from automated teller machines (ATMs) and bank branches. "Charges will be recovered beyond four free cash withdrawal transaction (including ATM and branch)," SBI says.
According to the bank website, these new charges would apply to the cheque book, transfer, and other non-financial transactions. The new service charges will come into effect from 1 July 2021 and will be applicable for basic savings bank deposit (BSBD) account holders
Cheque book charges
SBI would provide 10 cheque leaves free in a financial year to BSBD account holders. After that, SBI will charge a certain amount for providing cheques.
10 leaf cheque Book at Rs40 plus GST
25 leaf cheque Book at Rs75 plus GST
Emergency Cheque Book: Rs50 plus GST for 10 leaves or part thereof.
However, senior citizens will be exempted from these new service charges on cheque book.
The bank’s website mentions there will be four free cash withdrawals available — including ATMs and bank branches every month for BSBD account holders. The bank will apply a fee of Rs15 plus GST for every transaction beyond the free limit. The charges on cash withdrawal will be applicable at the home branch and ATMs and non-SBI ATMs.
Cash withdrawal at SBI branches
The bank will recover charges beyond four free cash withdrawal transactions. This includes the transactions done at a branch as well as a bank ATM. The new charge is Rs15 plus GST per cash withdrawal transaction at branch channel or ATM.
Non-financial transactions and transfer transactions will be free of cost at branches, ATM, CDM (cash dispensing machines) for the BSBD account holders.
Ironically speaking, BSBD account also known as zero balance savings account is primarily meant for poorer sections of society to encourage them to start saving without any burden of charges or fees. The bank offers the same interest rate on zero balance accounts as on regular savings bank accounts.
The study observed that SBI levying a charge of Rs17.70 for every debit transaction beyond four on the BSBD account holders was not "reasonable." As per the study, apart from SBI, the second largest public sector lender Punjab National Bank collected Rs9.9 crore from 3.9 crore BSBD accounts during the same period.
Levying of charges on BSBDA is guided by September 2013 RBI guidelines. As per the direction these accounts holders are 'allowed more than four withdrawals' in a month, at the bank's discretion provided the bank does not charge for the same.
Following the massive media backlash after the report was published, SBI had issued a clarification
in April saying it has refunded charges deducted on digital transactions from zero-balance or basic savings bank deposit (BSBD) account-holders. However, SBI added that it continues to levy charges on cash withdrawals over and above the four free withdrawals which are allowed per month.
A lot has been written about SBI’s punitive service charges. Moneylife Foundation has been at the forefront of speaking up for bank customers. Even the RBI staff was not spared so much so that they had to approach the RBI for its intervention. In 2017, the All India Reserve Bank Employees Association (AIRBEA) had sought the RBI Governor's intervention on charges and penalty levied
by SBI on account holders.
Samir Ghosh, general secretary of AIRBEA, in a letter to the then RBI governor Dr Urjit Patel, had said, "We are being constrained to draw your kind attention to certain recent business decisions of the country's largest bank SBI like withdraw cash only three times a month free of charge and fine failure to maintain balance."
"We urge that Section 35A of Banking Regulation Act, 1949 which empower Reserve Bank to give directions to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors," Ghosh had said in the letter.