Wednesday, August 29, 2007

Free service? Banks don't do any such favours

There's no such thing as a free lunch. Banks today offer a slew of services to the customer, which only seem to increase the amount that they charge you by the day.

Let’s take stock of what you pay to avail of services for a typical savings bank account.

1. Non-maintenance of minimum balance

You must maintain a stipulated minimum balance in your account (Rs 1,000 for a nationalised bank, Rs 5000 for a private bank).

If you fail to maintain this average quarterly minimum balance, you attract a bank charge of Rs 750-1500 respectively.

You could also face fines for cash transactions at branches and ATMs.

2. Chequebook charges

Most nationalised banks provide chequebooks free as per your requirement.

Many private ones, on the other hand, charge you Rs 50-200 per chequebook, if you use up more than 2-3 per quarter.

3. Account closure charges

Some banks charge Rs 50-200 if the account is closed before six months elapse.

4. Charges for certificates

Unlike most nationalised banks, private banks charge Rs 50-250 for documents like balance certificate, interest certificate, address confirmation, signature attestation, photo attestation etc.

5. Cheque return charges

Nationalised banks fine you Rs 50-200 in case of cheque return (due to insufficient funds, signature mismatch etc), but private ones charge you Rs 100-Rs 500.

6. Cash transaction at other branches

In case of a cash transaction at a branch other than where your account is opened, 1-3 transactions are free per quarter. Beyond that, be prepared to be charged at the rate of Rs 5 per for every Rs 1000 transacted.

7. ATM charges

If you use the ATM of another bank for balance enquiry or cash, you could be charged anything from Rs 10-100 per transaction.

8. Account statement

RBI directs that all banks must send free quarterly statements to their customers. Should you require more statements (in case of loss etc), you may have to pay Rs 50-500 per statement.

9. ATM or Debit Card fees

Most banks offer ATM cards free of cost, but some do charge their customers for debit cards. For example, ICICI Bank provides a combo ATM/ Debit card, for which it charges Rs 99 per annum.

Over and above these, there are several other charges, like outstation clearing charge (Rs 50- 500), pay order/ demand draft charge (based on amount), standing instruction charges, home cash delivery charges, old records retrieval charges, activation of dormant account charge etc.

Note: Visit the bank's web site or any of the branches, for a copy of these expenses. It is mandatory for every bank to give it to you.

The author, Ketul Shah, is a Chartered Accountant He can be contacted at