Banking services are most expensive at Canara and Axis, and least expensive at IDFC, Bandhan, and AU SFB

There are discrepancies in the penalties that banks charge for failing to maintain a minimum balance, according to the research Benchmarking Reasonableness of Service Charges by Banks in India.

The Reserve Bank of India (RBI) set the maximum fees banks may charge for a range of services up to 1999. Since then, banks have been free to choose their own service fees; however, the RBI has stressed that fees should be proportionate to expenses and fair.

According to a Moneylife Foundation survey, IDFC First Bank, Bandhan Bank, and AU Small Finance Bank have the lowest fees for the services they provide, whereas state-owned Canara Bank and private sector lender Axis Bank have the highest fees.

In addition to discussing procedures, the research Benchmarking Reasonableness of Service Charges by Banks in India raises issues with service charges.

IDFC First Bank, AU Small Finance Bank, and Bandhan Bank are the only scheduled commercial banks with very minimal fees or none at all.

With the exception of State Bank of India (SBI), only Bandhan Bank has no average monthly or quarterly balance requirements. In addition, two sizable cooperative banks, Saraswat Bank and SVC Cooperative Bank, also offer reasonable fees, according to the May 22 article.

The paper, which was commissioned by the Moneylife Foundation and written by Ashish Das of the Indian Institute of Technology-Bombay (IIT-B), was made public by SS Mundra, a former deputy governor of the Reserve Bank of India (RBI).

Conversely, the highest fees are associated with Canara Bank and Axis Bank. The survey said that Canara Bank was the least favorable bank due to its excessively expensive service fees for things like "DD Cancellation," "Self-Generation of ATM PIN," "mandatory-SMS alerts," as well as "non-maintenance of average balance" in rural regions.

Axis Bank charges comparatively more, with a few exceptions for "failed Standing Instruction," "non-financial transactions from own bank ATMs," and "non-maintenance of balance" in metro and urban accounts, according to the research.

The Reserve Bank of India (RBI) set the maximum amount that banks may charge for their services up to 1999. Since then, banks have been free to set their own fees, but the RBI has emphasized that they must be appropriate and commensurate with expenses.

Extra advice

The audit also identified disparities in the penalties that banks imposed for failing to maintain a minimum balance, with some banks levying costs that were disproportionately larger.

There are fourteen banks with a slab system; the punitive costs are fixed in rupees for each slab. According to the analysis, these banks apply a punitive fee that is disproportionately larger in the lower slab of deficits than in the higher slabs.

Additionally, it said that Central Bank of India, Bank of Maharashtra, Bank of India, and IDBI Bank had neglected to notify clients of the advantages of branch-based NEFT/RTGS service charges in defiance of RBI recommendations.