‘Don’t Charge Customers For Failed ATM Transactions”, RBI to Banks

Banking regulator the Reserve Bank of India (RBI) has come down heavily on all commercial banks causing unnecessary pains to its customers and charging them for the ATM transactions that have failed due to reasons beyond the control of the customers.

In a communication issued on Saturday, the RBI clearly stated that “It has come to our notice that transactions that have failed due to technical reasons, non-availability of currency in ATMs, etc., are also included in the number of free ATM transactions”.

Without mincing the words, RBI made it clear and said, “It is hereby clarified that transactions which fail on account of technical reasons like hardware, software, communication issues; non-availability of currency notes in the ATM; and other declines ascribable directly/wholly to the bank or service provider; invalid PIN/ validations; etc., shall not be counted as valid ATM transactions for the customer. Consequently, no charges therefore shall be levied”.

“Non-cash withdrawal transactions (such as balance enquiry, cheque book request, payment of taxes, funds transfer, etc.), which constitute ‘on-us’ transactions (i.e., when a card is used at an ATM of the bank which has issued the card) shall also not be part of the number of free ATM transactions”, it added.

During 2017-18, public sector banks and major private sector banks collected nearly Rs 6,000 crore as penalty for non-maintenance of minimum balance charges, as per the data available with banks.If ATM withdrawal charges and cash transaction fees, among others, are also included, this escalates to an even bigger amount.

It is believed that the RBI’s above diktat follows a survey undertaken by the regulator in Mumbai recently to ascertain customer feedback and need for rationalisation of charges.

The findings of the study, revealed by the RBI recently, have also been corroborated by the quantum of complaints received by the banking ombudsman during 2017-18, which was released by the central bank last week. Complaints on ‘non-observance of fair practice code’ continued to account for the highest share of total complaints received across the country at 22.1 per cent.

More than 30 per cent of the respondents said that information about service charges was not shared by banks at the time of a/c opening

A majority of customers are upset over the service charges being levied by banks under various categories.

More than 25 per cent of the respondents expressed their discontent over charges such as penalty on non-maintenance of minimum balance, cash deposit charges at home and non-home branches, cheque return charges (deposited by the customers), and for signature verification.

The study revealed that 72 per cent of the respondents felt the frontline staff of the branch was the main source of information in this regard.

There is a need for greater transparency on the quantum of charges being levied. More than 30 per cent of the respondents indicated that information about service charges and fees was not shared by the banks at the time of opening an account. Any subsequent changes were also not informed to them.

“Focussed action by banks is necessary in this regard to ensure that the staff, especially at customer touch points, are equipped with the requisite skills and are adequately trained,” the RBI study said.