What changed
RBI accepted the Working Group's recommendations with modifications to ensure reasonableness of bank charges. Urban co-operative banks are now required to identify basic banking services using two parameters: nature of transactions (e.g., deposit/loan accounts, remittances) and value of transactions (e.g., remittances up to Rs. 10,000). The annex provides a list of basic services and action points for banks.
What it means for you
Banks must now clearly define and possibly cap charges for basic services like cheque books, passbooks, ATM cards, and remittances up to Rs. 10,000. This aims to protect lower and middle-income customers from excessive fees. Banks need to review their fee structures and ensure compliance with the new guidelines.
What you must do
- Identify basic banking services using the two parameters: nature and value of transactions (e.g., remittances up to Rs. 10,000).
- Review and adjust service charges for the listed basic services to ensure reasonableness.
- Implement the action points specified in the annex to the circular.
- Consider including additional services as basic services at your discretion.
Who it affects
All Primary (Urban) Co-operative Banks, Customers in middle and lower segments
What are the two parameters for identifying basic banking services?
The first parameter is the nature of transactions, covering services like deposit/loan accounts, remittances, and collections. The second is the value of transactions, with thresholds like remittances up to Rs. 10,000 per instance.
Does the list of basic services include all possible services?
No, the list is indicative and not exhaustive. Banks can include additional services as basic services at their discretion.
What is the main goal of this circular?
To ensure fair practices in banking services by making bank charges reasonable, especially for basic services used by lower and middle-income individuals.