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Levy of Penal Charges on Non-Maintenance of Minimum Balances in Inoperative Accounts


 Notice Date : 15 May 2014

RBI/2013-14/592

UBD.BPD.Cir.No.62/13.03.000/2013-14

May 15, 2014

The Chief Executive Officer

All Primary (Urban) Co-operative Banks

Dear Sir / Madam

Levy of Penal Charges on Non-Maintenance of

Minimum Balances in Inoperative Accounts

Please refer to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014, proposing certain measures towards consumer protection such as non-levy of penal charges for non-maintenance of minimum balance in the inoperative accounts.

2. In this connection, a reference is invited to our circular UBD.(PCB).Cir.No.54/09.39.000/05-06 dated May 26, 2006 in which urban cooperative banks were advised to display and update, on their website, the details of various service charges including minimum balance to be maintained in savings bank accounts and charges, if any, for non-maintenance thereof.

3. Further, in terms of Para 3 of our Circular UBD.BPD.Cir.5/13.01.000/2012-13 dated August 17, 2012 on 'Financial Inclusion-Access to Banking Services - Basic Savings Bank Deposit Accounts' it was advised to banks that no charge should be levied for non-operation / activation of Basic Savings Bank Deposit Accounts (BSBDAs).

4. It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account.

Yours faithfully,

(A.K.Bera)

Principal Chief General Manager

_________________

circular UBD.(PCB).Cir.No.54/09.39.000/05-06 dated May 26, 2006 is mentioned below:

RBI/ 2005-06/392
UBD. (PCB).Cir.No.54/09.39.000/05-06

May 26, 2006

The Chief Executive Officers of
All Primary (Urban Co-operative Banks)

Dear Sir/Madam,

Annual Policy Statement for the year 2006-07- Fair Practices Code- Display of Bank Charges-UCBs

Please refer to the paragraph 162 of the Annual Policy Statement for the year 2006-07, a copy of which is enclosed.

2. As per extant instructions, the decision to prescribe service charges is left to the discretion of the Boards of individual banks. Banks would normally be expected, while fixing the service charges, to ensure that charges are reasonable, consistent with the cost of providing these services and that the customers with low value/volume of transactions are not penalized.

3. The Reserve Bank continues to receive representations from the public about the unreasonable and non-transparent service charges being levied by banks indicating that the existing institutional mechanism in this regard is not adequate. In order to ensure transparency in banking services, scheduled banks are advised to display and update, on their website, the details of various service charges in the enclosed format in Annex I. The formats could be modified depending on products offered.

4. Further, all other UCBs including scheduled UCBs are also advised to display the charges relating to certain services as at Annex II. This may also be displayed in the local languages.

5. Scheduled UCBs may furnish to us by June 15, 2006 the details of service charges presently applicable (Annexure II) , to enable us to place them on the RBI website. Further, changes in service charges from time to time may also be furnished to us to update the information.

Yours faithfully,

(N.S.Vishwanathan)

Chief General Manager-in-charge.


Annual Policy Statement for the year 2006-07 (April 2006)

Fair Practices Code: Reasonableness of Bank Charges

162. The Reserve Bank continues to receive representations from the public about unreasonable and non-transparent service charges being levied by banks indicating that the existing institutional mechanism in this regard is not adequate. In order to ensure fair practices in banking services, it is proposed:

• To make it obligatory for banks to display and update, in their offices/branches as also on their websites, the details of various service charges in a format to be approved by the Reserve Bank. The Reserve Bank would also place such details on its website.


ANNEX- I

Service Charges -Minimum Information to be put on the Bank's website

Name of the bank

Savings Bank A/c - No frills A/c

Minimum Balance

Charges for non maintenance thereof

Saving Bank Accounts with Cheque facility

Minimum Balance

Charges for non maintenance thereof

Saving Bank Accounts without Cheque facility

Minimum Balance

Charges for non maintenance thereof

Other savings bank account facilities

Issue of Duplicate Statement

Issue of loose cheque leaves

Issue of duplicate pass book

Mode of calculation of minimum balance

Remittance Facilities through own bank

DD- Issue

DD-Cancellation

DD-Duplicate

DD-Revalidation

PO - Issue

PO-cancellation

PO-Duplicate

PO-Revalidation

TT - Issue

TT - Cancellation

TT-Duplicate

TT-Revalidation

EFT Charges- inward

EFT Charges- outward

RTGS-Outward

RTGS-Inward

Collection of Cheques

Remittance Facilities through other bank

DD- Issue

DD-Cancellation

DD-Duplicate

DD-Revalidation

PO - Issue

PO-cancellation

PO-Duplicate

PO-Revalidation

TT - Issue

TT - Cancellation

TT-Duplicate

TT-Revalidation

EFT Charges- inward

EFT Charges- outward

RTGS-Outward

RTGS-Inward

Collection of Cheques

Foreign Exchange Transactions

Remittance Outward

Remittance Inward

TCs - Selling

TCs - Encashing

TCs - Foreign Currency

Cheque Collection

Local

Outstation through own bank

Outstation through another bank

Bouncing of cheques- Local

Bouncing of cheques- outstation- through own bank

Bouncing of cheques- outstation- through another bank

Retail Loan

Loan Processing Charges

Prepayment Charges

No due Certificate

Solvency Certificate

Charges for late payment of EMI

Charges for changing from fixed to floating rates of interest

Charges for changing from float to fixed rates of interest

Cards

ATM

Membership fee

Annual Fee

Renewal Charges

Late Payment Charges

Interest Charges

Replacement charges

Transaction Charge for Partner banks

Transaction Charge for Non-Partner banks

Credit Card

Membership fee

Annual Fee

Renewal Charges

Late Payment Charges

Interest Charges

Replacement charges

Cash withdrawal

Debit Card

Membership fee

Annual Fee

Renewal Charges

Late Payment Charges

Replacement charges

Cash withdrawal

MISCELLANEOUS

Balance enquiry

Balance Certificate

Interest Certificate

Account closure

Use of Fax/Telephone/Modem

Photo attestation

Signature attestation

Stop Payment Charges

Inoperative account

 

ANNEX – II

Service Charges-Minimum information to be displayed in the premises of bank branches.

A. Services rendered free of charge:

B. Others

Minimum Balances to be maintained in the SB account

Charges leviable for non-maintenance of minimum balance in SB account

Charges for collection of outstation cheques

Charges for issue of Demand Draft

Charges for issue of cheque books, if any

Charges for account statement

Charges for account closure, if any

Charges for deposit/withdrawal at ATM locations, if any

 

__________________

Circular UBD.BPD.Cir.5/13.01.000/2012-13 dated August 17, 2012 is mentioned below:

RBI/2012-13/169
UBD.BPD.Cir.No. 5/13.01.000//2012-13

August 17, 2012

The Chief Executive Officer
All Primary (Urban) Co-operative Banks

Dear Sir/Madam,

Financial Inclusion- Access to Banking
Services – Basic Savings Bank Deposit Account

Please refer to paragraphs 88 and 89 of Monetary Policy Statement for the year 2012-13 announced on April 17, 2012.

2. The Urban Co-operative Banks were advised in November 2005 to make available a basic banking 'no-frills' account either with 'nil' or very low minimum balance as well as charges that would make such accounts accessible to vast sections of population. With a view to doing away with the stigma associated with the nomenclature ‘no-frills’ account and making the basic banking facilities available in a more uniform manner across banking system, it has been decided to modify the guidelines on opening of basic banking ‘no-frills’ accounts. Accordingly, in supersession of instructions contained in circular No.UBD.BPD.Cir.No.19/ 13.01.000/2005-06 dated November 24, 2005 on Financial Inclusion, Urban Co-operative Banks are advised to offer a ‘Basic Savings Bank Deposit Account’ which will offer following minimum common facilities to all their customers:

        i.            The ‘Basic Savings Bank Deposit Account’ should be considered a normal banking service available to all.

      ii.            This account shall not have the requirement of any minimum balance.

    iii.            The services available in the account will include deposit and withdrawal of cash at bank branch as well as ATMs; receipt/credit of money through electronic payment channels or by means of deposit/collection of cheques drawn by Central/State Government agencies and departments;

    iv.            While there will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals; and

      v.            Facility of ATM card or ATM-cum-Debit Card;

3. The above facilities will be provided without any charges. Further, no charge will be levied for non-operation/activation of in-operative ‘Basic Savings Bank Deposit Account’.

4. The Urban Co-operative Banks would be free to evolve other requirements including pricing structure for additional value-added services beyond the stipulated basic minimum services on reasonable and transparent basis and applied in a non-discriminatory manner.

5. The ‘Basic Savings Bank Deposit Account’ would be subject to RBI instructions on Know Your Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to time. If such account is opened on the basis of simplified KYC norms, the account would additionally be treated as a ‘Small Account’ and would be subject to conditions stipulated for such accounts as indicated in paragraph 2.6 (iii) of Master Circular UBD.BPD. (PCB).MC.No. 16/12.05.001/2012-13 dated July 2, 2012 on Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Measures/Combating of Financing of Terrorism (CFT) / Obligations of banks under Prevention of Money Laundering Act (PMLA), 2002.

6. Holders of ‘Basic Savings Bank Deposit Account’ will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a ‘Basic Savings Bank Deposit Account’.

7. The existing basic banking ‘no-frills’ accounts should be converted to ‘Basic Savings Bank Deposit Account’ as per the instructions contained in para 2 above.

Yours faithfully,

(A.Udgata)
Chief General Manager-in-Charge

 

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on 21 May 2014
Notification No : RBI/2013-14/592
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