May I Overcharge You

Banks are fleecing customers to shore up their profits and offset the dead weight of bad loans to corporates.

- Arindam Mukherjee & Lola Nayar

When the GST era dawned this month, online jokesters quipped that it was the most inscrutable thing after Duckworth Lewis. But paradoxically, it may have brought a disquieting clarity to another zone of uni­versal experience. Amid the flurry of news reports detail­ing what would entail a higher tax of 18 per cent, there was the list of banking services. It read like a death roll: withdrawals, deposits, ATM transactions, ordering fresh cheque books, drafts, loan processing, locker charges, NEFT, SMS alerts, what not.

That’s when a lot of people realised what had already crept up on them: beginning this March, without much of a noise, banks had significantly hiked service charges on a range of things, and imposed new ones—like the charges for withdrawals and deposits after a prescribed free number. Trapped without anyone realising it, India’s vast bank customer base—all hundreds of millions of them—were already bleeding from a thousand small cuts.

Some folks, especially those engaged in business and therefore acutely aware of margins, had started feeling it. For Pasha, who has a fish business in Indirapuram near Delhi, the increased bank charges hit like a bolt. He has to withdraw money two to three times every week to pick up his supplies. After four withdrawals from his savings account, his bank charges him a minimum Rs 150 plus tax for each subsequent withdrawal. The number four is illusory too, for each act of deposit or withdrawal counts as one. The corollary: he has had to increase the price of fish to offset the damages.

Another cost-savvy customer, Mani Shekhar Jha, runs his own business in Old Delhi’s Sadar Bazaar, for which he needs to withdraw money several times in a month. Imagine just nine or 10 extra withdrawals each month, at even Rs 50 plus tax each time. His annual outgo on bank charges, he calculates, will be around Rs 6,000-7,000 at this rate.