Banks now charge you for almost all services; here’s how to beat them


“It is easier to rob by setting up a bank than by holding up a bank clerk,” German poet and playwright Bertolt Brecht once said. While that statement may be little over the top, many might be tempted to say the same regarding the increasing trend in bank transaction charges of late in India. Take for instance, State Bank of India. The largest bank of the country just this week announced an increase charges for a number of transactions effective 1 April.

1) SBI will permit savings bank account holders to deposit and withdraw cash only three times a month free of charge. Beyond that, it will charge Rs 50 plus service tax for every transaction.

2) Failure to maintain a minimum balance amount in your account quarterly will attract a fine. For instance, for accounts held in metros branches, the balance required is Rs 5,000. If the amount falls below Rs 3,750 (or 75 percent), the penalty is Rs 100 plus service tax. If the amount falls to Rs 2,500, the bank will charge Rs 50 plus service tax. The charges and minimum account balance vary across metro, urban, semi-urban and rural areas. Rural branches attract the least.

3) Withdrawal of cash from ATMs will attract a charge of up to Rs 20 if the number of transactions exceeds three from other bank’s ATMs in a month and Rs 10 for more than five withdrawals from SBI ATMs.

4) There’s some respite for account holder who have a balance of more than Rs 25,000. The bank will not levy any charge on withdrawals from its own ATMs on such accounts. And if your balance exceeds Rs 1 lakh, transactions from other banks’ ATMs will not be charged.

5) Even SMS alerts will not be spared. For accounts holding quarterly balance of Rs 25,000 or less, SMS alerts will be charged Rs 15 per quarter.

6) There will be no charge for UPI/ USSD transactions of up to Rs 1,000. Beyond Rs 1,000, there are charges (see the table below).

And it is not just SBI. Earlier this week HDFC Bank made headlines for increasing their bank transaction charges at the bank branch. HDFC Bank will charge Rs 150 per transaction, beyond four free ones (deposits and withdrawals) each month for salary as well as savings account. For transactions at home branches, the bank will allow deposits or withdrawals of up to Rs 2 lakh free of cost at one go per day. Beyond this, it will charge Rs 5 per Rs 1,000, or a minimum of Rs 150. At non-home branches, transactions beyond Rs 25,000 a day will attract a charge of Rs 5 per Rs 1,000 or a minimum of Rs 150.

ICICI Bank and Axis Bank have been charging similar fee for a while now. ICICI Bank do not charge for first four cash transactions a month at home branches. Thereafter Rs 5 per Rs 1,000 or a minimum of Rs 150 would be charged. The third-party limit is Rs 50,000 per day.

For the ICICI Bank customers, at non-home branches only one cash transaction is free. Thereafter the charges mentioned above apply. When it comes to cash deposit at ATMs, first transaction is free. Thereafter, the charges apply.

At Axis Bank, the first five cash transactions are free. Thereafter a charge of Rs 5 per thousand rupees or Rs 150, whichever is higher, is applicable.

If you are not maintaining the minimum account balance, HDFC Bank will charge you a whopping Rs 50 for phone banking per call if you take the help an executive for service/transaction that are available on IVR.

The reason why the banks are taking these steps is simple – cut cost. For the beginners, banks bear a cost for maintaining branches. So these charges are expected to force the customers to stay away from bank branch and use alternative channels like digital banking (read this article).

However, here are a few things you could do to avoid being charged by your bank:

Close unused accounts: When you move jobs you often leave behind a trail of unused accounts. There’s a good chance that such accounts have now fallen below the minimum amount balance limit and will attract charges. Check all these accounts, and if they have been inactive for a while, simply close them. Keeping money idle in a savings account makes no sense when your have other financial instruments that offer better returns.

Reduce dependency on cheques: Think twice before you write cheques. It may be better to use online banking instead. Most banks do issue at least one cheque book (20-25 leaves) per quarter free of cost if you maintain a minimum balance. Otherwise, you pay up. If you want to use more cheque leaves, you will have to pay for each of those.

Don’t be careless: Try and remember your card PINs. Many banks charge for regeneration of PIN. Take, for instance, HDFC Bank which charges Rs 100 plus applicable taxes for physical delivery of regenerated IPIN. For debit card PIN regeneration too there is a charge – Rs. 50 (plus taxes and cess).

Go digital, know your documentation charges: Reduce dependency on paper statements. Quarterly account statements are provided free by banks. So are the monthly email statements. However, if you want a physical monthly statement posted/ couriered, be prepared to pay. Also remember, every time you do an address confirmation, signature attestation and photo attestation you are charged.

The only thing we can do as customers now, choose your bank wisely. See what you can afford and what services you can let go