The IIT-Bombay study observed that the SBI’s decision to levy a charge of Rs17.70 for every debit transaction beyond four by the BSBDA account holders cannot be considered reasonable.

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Several banks, including the State Bank of India (SBI), have been imposing excessive charges on certain services provided to poor persons having zero-balance or Basic Savings Bank Deposit Accounts (BSBDA), a study by the IIT-Bombay has revealed. The study observed that the SBI’s decision to levy a charge of Rs17.70 for every debit transaction beyond four by the BSBDA account holders cannot be considered as “reasonable.”

It highlighted that the imposition of service charges resulted in undue collections to the tune of over Rs300 crore from among nearly 12 crore Basic Savings Bank Deposit Account (BSBDA) holders of SBI during the period 2015-20. India’s second-largest public sector lender Punjab National Bank, which has 3.9 crore BSBD accounts, collected Rs9.9 crore during the same period.

There had been a systematic breach in the RBI regulations on BSBDAs by few banks, most notably by the SBI that hosts the maximum number of BSBDAs, when it charged @ Rs17.70 for every debit transaction (even via digital means) beyond four a month.

This imposition of service charges resulted in undue collections to the tune of over Rs300 crore from among nearly 12 crore BSBDA holders of SBI during the period 2015-20, of which the period 2018-19 alone saw a collection of Rs72 crore and the period 2019-20, Rs158 crore.

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.

“While defining the features of a BSBDA, the regulatory requirements made it amply clear that in addition to mandatory free banking services (that included four withdrawals per month), as long as the savings deposit account is a BSBDA, banks cannot impose any charge even for value-added banking services that a bank may like to offer at their discretion,” the study said. The RBI considers a withdrawal, beyond four a month, a value-added service, it said.

“We assess the dereliction in SBI’s duty towards the PMJDY when the BSBDA users were unduly (and against the extant regulations) forced to part with such high charges for their day-to-day (noncash) digital debit transactions that the bank allowed in a BSBDA,” it said.

SBI, in breach of RBI regulations set forth as early as 2013, had been charging the BSBDA holders for every debit transaction beyond four a month, it said, adding, the charges were as high as Rs17.70 even for digital transactions like NEFT, IMPS, UPI, BHIM-UPI and debit cards for merchant payments.

“On the one hand, the country strongly promoted digital means of payments, while on the other hand, SBI discouraged these very people, to transact digitally for their day-to-day expenditures, by charging an exploitative Rs17.70 per digital transaction. This dwarfed the spirit of financial inclusion,” it said.

The RBI’s nonchalant attitude to supervise its own regulations encouraged other banks to become unreasonable towards charges beyond four debits a month, it said. “Although not by intent, but in practice RBI has allowed victimization of these BSBDA customers despite being duty-bound to protect them. Two of its specialized departments the Consumer Education and Protection Department’ and the Financial Inclusion and Development Department’ allowed this to continue over years even though RBI regulations for ensuring the reasonableness of service charges were in place,” the study claimed.

When SBI charged for every UPI/BHIM-UPI and RuPay digital payments though RBI was approached first to address the same under extant laws, it remained silent, the study said, adding it was the government, which when subsequently approached, that came forward to instruct the banks(on August 30, 2020), to retrospectively (since January 1, 2020) return the money to the depositors or face penal consequences.

Despite this respite, the RBI still needs to ensure compliance of its own regulations when SBI still considers itself compliant while charging as high as Rs 17.70 for every digital debit transaction, through means other than UPI/BHIM-UPI and RuPay-digital, carried out since January 2020.

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