Mayur Shetty, TNN | Oct 28, 2014, 04.56AM IST | Time of India
A study by IIT-Bombay has highlighted how such cash handling charges are hurting the underprivileged who work away from their permanent place of residence.
MUMBAI : Charges for bank transactions outside the home branch are a relic of the pre-core banking system (CBS) days. Yet, banks are continuing with this legacy using a loophole in a Reserve Bank of India (RBI) circular and imposing charges under the head of ‘handling charges’ for cash deposits although it makes no difference to the bank where the transaction is being conducted.
A study by IIT-Bombay has highlighted how such cash handling charges are hurting the underprivileged who work away from their permanent place of residence. “Instead of harnessing the potential of the core banking system, banks are misusing the system with unjustified charges,” said Ashish Das, professor of statistics at IIT-Bombay, who has conducted the study.
The study shows that while several banks discriminate in the way they treat home branch and non-home branch transactions, there is no uniformity in the practice.
HDFC Bank, for example, allows one free transaction up to Rs 49,999 per day at a non-home bank branch as long as the money is deposited by the accountholder himself. But if it is a third party, including a family member, there is a charge of Rs 100.
ICICI Bank allows one cash deposit transaction in a month by either the customer or his representative in a non-home branch. Beyond that, deposits at non-home branch accounts are charged Rs 5 per thousand rupees.
State Bank of India has recently capped the number of free transactions to five in a month, beyond that there will be a charge of Rs 50 per transaction. The bank however does not place any restrictions on use of cash deposit machines (CDMs). Punjab National Bank, on the other hand, places restrictions on the number of transactions that can be done in a non-home branch. It also differentiates between deposits made in a cash deposit machine within the home branch and those outside the branch. Outstation deposits are charged at the rate of Rs 2 per Rs 1,000 or part of it.
The report, titled A Myth Called ‘Any-Branch Banking’, recommends that RBI end the disparity in charges for cash transactions at home branches and non-home branches. It also calls upon RBI to popularize cash deposit machines. To popularize the use of these machines, the report recommends that the National Payments Corporation of India take up the feature of reverse debit (cash deposit) under its interoperable debit card platform. This will allow account holders to make deposits in any machine. “With the envisaged increase in CDMs in the country, it is the right time to work towards making the CDMs interoperable,” the report said.
In its circular issued in July last year the RBI had said, “To ensure that bank customers are treated fairly and reasonably without any discrimination and in a transparent manner at all branches of banks/service delivery locations under CBS environment, banks are advised to follow a uniform, fair and transparent pricing policy and not discriminate between their customers at home branch and non-home branches.” However, the circular also clarified that cash handling charges may not be included under intersol (interbank) charges.
Following the introduction of core banking systems, details of account holders are maintained in central servers and can be accessed through any branch across the country.
Source : http://goo.gl/d6Qxuz