Service charge by new-age private banks, SFBs seen as reasonable

"The study found that services such as the SMS alert after an account is debited, which is mandated by the RBI, are charged by many banks. , for instance, charges for SMS alerts of payment OTPs," said Ashish Das, professor of statistics at IIT Bombay, and the author of the study.

The Reserve Bank of India (RBI) has set mandates and directed banks on how they can fix the charges levied for the services they provide and ensure reasonableness, vesting this responsibility with the banks and their board members.

Canara Bank charged ₹20 plus GST for ATM or POS decline due to insufficient balance since 2017. The fee was levied without board approval and without disclosing the penalty to the public. In 2023, the RBI allowed retrospective approval to charge ₹17 plus GST, asking Canara Bank to return the extra ₹3.

"When the RBI questioned Canara Bank on the rationale behind charging ₹20, it replied saying that it did so because SBI charged the same," Das said.

Commenting on the study, former RBI Deputy Governor SS Mundra said the ideal way to deal with this is to have banks do an honest introspection on the charges levied by them.

"The bank staff are always there to help, but many times, systems prevailing within the bank make them incapable to address things, making it appear that they are the bottleneck when in reality, the bottlenecks are much higher up the ladder in the policies made by the management," Das said.