Tuesday, March 24, 2015

Private Banks to raise service charges, penalties

From April 1, customers of private banks have to spend more to avail of services. They will also face higher penalties for failing to maintain average balance in savings accounts. While banks are expected to cut lending rates from April 1, the increase in service charges and penalties will pinch customers.

All major private lenders - ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank - have decided to increase charges and penalties. ICICI Bank, India's largest private lender, will charge Rs 100 more for non-maintenance of average monthly balance in metros and Rs 50 more in semi-urban areas. The average monthly balance requirement for urban and semi-urban customers is Rs 10,000 and Rs 5,000, respectively.

The bank will also charge cash deposits by customers or customer representatives at branches not in the city where the account is opened. While it will levy Rs 5 for every Rs 1,000 deposited at counters, deposits in machines will be free for the first transaction every month; Rs 5 for every Rs 1,000 will be charged from the second transaction. So far, there were no charges for the first cash deposit at the counter every month; in machines, customers could deposit as many times as they wanted.

"With effect from April 1, in the event of non-maintenance of minimum monthly average balance, the bank will notify customers by SMS/e-mail/ letter, etc, in the event of the minimum balance not being restored in the account in the subsequent month, charges for non-maintenance of minimum monthly average balance will be applicable," said ICICI Bank.

From April 1, HDFC Bank will charge Rs 75 for every 25-page chequebook beyond the first. It will charge Rs 150-600 for non-maintenance of minimum average monthly balance for urban customers (minimum average monthly balance Rs 10,000) and Rs 150-300 for semi-urban customers (minimum average monthly balance Rs 5,000).

Axis Bank has increased service charge for the 'Prime Plus' account segment from Rs 250 a month for non-maintenance of minimum balance to Rs 5 for every Rs 100 shortfall compared to the average monthly balance requirement or Rs 350, whichever is lower.

A similar increase will be implemented for the domestic prime (excluding some categories) and non-resident Indian segments. All these charges will be applicable from April 1. Customers will, however, be given a grace period of 30 days to meet the balance requirement and in case of non-maintenance, the service fee will be applicable. These charges are for metro/urban areas.

Kotak Mahindra Bank has raised the charges for non-maintenance of average monthly balance in 'Edge' savings accounts. If the average balance is less than the required amount but more than half of it, a charge of Rs 300 will be imposed (earlier Rs 250). If the average balance is less than half the required amount, the bank will charge Rs 400 (against Rs 350 earlier).

The bank has said from April 1, in case of a default in maintenance of average monthly balance, it will notify the customer, adding the average balance requirement has to be met in the subsequent month (notice month). Else, non-maintenance charges for both the 'default month' and 'notice month' would be imposed, it added.

Source : http://www.business-standard.com/article/finance/pvt-banks-to-raise-service-charges-penalties-115032000042_1.html#.VQtpowDldVg.gmail

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