AWARENESS ON BANK CHARGES

INTRODUCTION
We all know the importance of banks in the modern world. The services provided by banks are numerous and very much valuable. These services are not provide free of cost. Or each and every products and services banks will charge a fee and such fees are debited to customers account. This paper is about such bank charges that reduces customers balance. Each customer is losing his money knowingly and unknowingly in banking transaction due to carelessness and ignorance. Unless utmost care is exercised one may lose rs10 to lakhs. Our bank balance is reduced through some hidden charges. Everybody knows that the products and services of banks have its cost.at the same time there are also some hidden charges. By the introduction of CORE banking, banking charges were supposed to become low, but service charge has increased too much. Experts in banking field point out that bank charges increases due to the increase in operating cost of banks. Banks are of the view that high charges are to be paid for the better service they provide. RBI granted permission to banks to fix service charge. At the same time, to ensure transparency RBI instructs bank that such charges should be published in the website and notice board. But due to increase in number of charges and carelessness customers are often unaware of it.

WAYS IN WHICH MONEY IS LOST

MINIMUM BALANCE

The main issue in SB and Current account is minimum balance. Eventhough RBI has not yet recommended that minimum balance is required in SB and Current account or should impose fine for inadequate balance; each bank has their own regarding minimum balance. Various banks fix their minimum balance in SB account from Rs500 to 25000 and that in current account is Rs3000 to 1 lakh. In the absence of minimum balance, in SB account various banks charge Rs100 to 2500 as fine and that in case of Current account is Rs.500 to 6,000. These charges are reduced from the bank account itself without the knowledge of customers every 180 days (3 months). Moreover Rs.100 will be reduced from the account for each transaction carried over without having minimum balance.

BOUNCED CHEQUE

In times of bouncing of local and outstation cheque deposited in SB account public sector bank impose fine of Rs.75 to 400. If the customer issue cheque without having sufficient balance in the account, Rs.150 to 500 will be charged as fine. This is also applicable in current account.

CHEQUE LEAF Banks normally give 10 to 30 cheque leaves in SB account and current account per year during different periods. But for cheque leaves given more than this limit, banks will charge Rs.3 for each leaf. And if it is given without having minimum balance in account, it will rise to Rs.5. STANDING INSTRUCTION

A customer can give standing instruction to banks for various payments. For registration of such standing instructions Rs.50 to 150 is charged as registration fee and also Rs.10 to 25 will be charged as execution charge for each instruction. Moreover for cancelling and altering these instruction also requires payment of additional charges.

ANYWHERE BANKING

One can carry out banking from anywhere with the introduction of CORE banking. But Rs.25 to 100 will be charged as service charge for withdrawing or depositing through any branch other than where the customer has account. STOP PAYMENT

In SB and current account Rs.35 to 100 will be charged as service charge for stop payment order given for each cheque. MOBILE BANKING

Mobile banking is entirely free of cost, but annual or half yearly service charges are imposed on mobile alerts. DEBIT CARDS

Some banks do not charge annual fee for debit card, while other banks charge Rs.50 to 100 as annual fee. Those banks do not charge annual fee has account maintenance fees. These charges are reduced from the customers account without his knowledge. Even though, RBI instruct banks that, transactions carried over through ATM of other banks should free, still now banks collect service charge for such transactions. CREDIT CARDS

High interest bearing credit cards make the customer lose his money. 2.5% to 3.5% monthly interest for all cash advances seems attractive. But it should be noted that, annually it becomes 15.30% to 40.20%. LOAN INTERST

Customers are mostly deceived in determining loan interest. For housing loan, vehicle loan, personal loan, educational loan, etc. interest is calculated under flat rate or diminishing rate. Under flat rate, loan amount i.e. principal and interest is added and the sum is divided with loan period to find out EMI. But under diminishing rate, each repayment reduces he balance amount. And thus EMI will be low. Under flat rate interest rate will be low but total repaying amount will be high. Most of the customers are deceived by this low interest. Loan amount 15 lakhs 15 lakhs 15 lakhs Rate of interest 9% 9% 11% Flat /Diminishing Flat Diminishing Diminishing Period of loan(Years) 10 10 10 EMI Total interest 13,50,000 7,80,000 9,70,000 Total repayment 28,50,000 22,80,000 24,70,000

23,750 19,001 20,662

Source: Dhanam Magazine, November 2010

TIPS
Customer should be fully aware of the terms and conditions regarding each transaction. For every loan raised, customer should know whether interest is charged under flat rate or diminishing rate. Every banking product has its cost; this should be borne in mind. The * sign in the documents denote hidden charges. Customer should enquire about such charges

CONCLUSION
This paper is not meant to blame any banking institution; this is only to make awareness about various charges that are usually unnoticed by the customers. We all know that without banking institution commerce cant be carried out effectively. Source: Dhanam Magazine, November 2010 www.rbi.org.in