Rs 25 per ATM cash withdrawal? SBI’s new rule is illogical and will hurt common man

If a circular on the website of the State Bank of India (SBI) is any indication, from 1 June onwards every cash withdrawal from SBI’s ATMs will attract a charge of Rs 25 per transaction.

Every IMPS transfer through mobile, UPI or internet banking will be charged Rs 5 till Rs 1 lakh plus service tax, Rs 15 till Rs 2 lakh and Rs 25 above that. For basic savings bank deposit accounts, beyond 4 free cash withdrawals (both at branch and ATM), SBI will charge Rs 50 plus service tax for withdrawals at branches, Rs 10 per SBI ATMs and Rs 20 per other bank ATMs.

A customer performs a transaction on an ATM at a branch of Hungary's largest lender OTP Bank in central Budapest July 24, 2013. REUTERS/Laszlo Balogh (HUNGARY - Tags: BUSINESS) - RTX11X2Y

Representational image. Reuters

Not just that, even to exchange soiled notes, the bank will now charge a nominal fee. An SBI official said there is some “confusion” about the charge structure and the bank will soon clarify on the issue. But, already, there has been protests against the bank in states like Kerala (read here), where the LDF government has sought explanation from SBI officials for charging common customers."

This is outrageous and the central government is cheating the people. Ever since the demonetisation began, the Centre has been bullying people. This is going to be taken up in and out of parliament very strongly," IANS quoted CPM Lok Sabha member M.B. Rajesh as saying.

It wasn’t long ago when SBI said it will penalise customers if minimum average balance falls below Rs 5,000 a month, which drew protests. As things stand, the Rs 25 per cash withdrawal rule will have even bigger adverse impact on the common man, particularly those who are yet to migrate to internet, mobile banking for daily transactions. As far as this segment is concerned, SBI’s move is illogical and something that’ll drive away the common customer from the banks back to the informal banking channels.

Also, it is a bit surprising to see banks like SBI even imposing charges on internet fund transfers and deposit/withdrawals through BCs (business correspondents) at a time when the Narendra Modi-government is trying hard to encourage more number of people to use non-cash methods and expand banking services to the far flung areas of the country where bank branches are not present.

Not just SBI, other banks too have been more aggressive in the recent past to charge the customer almost for every service including cash withdrawals, particularly non-home branch customers. Non-home branch customer will have to pay more for services compared with home-branch client. Here, the question is why should a bank punish its customers on the basis of a home branch and non-home branch transactions when bank accounts are operated in core banking mode? Typically, banks give a reason to keep restrictions on cash transactions (even in public sector banks) from a customer from other branches of the same bank citing the KYC issue.

The logic is that the home branch would know the background of the customer better and hence can take more informed decisions on their transactions. But, in the era of core banking, this shouldn’t happen. For instance, if a young customer has his home branch in one city and if he/she is currently based in another place for employment purpose, obviously the person cannot go to home branch to perform the cash transaction to avoid non-home branch customer fees.

As far as imposing charges on every ATM withdrawals are concerned, SBI’s move lacks logic in every sense. In the rural India, people still predominantly use cash to fulfill their daily transactions and ATMs continue to be major centres for cash withdrawals. Those customers in the small income group and students will have to draw small amounts multiple times from ATMs. The Rs 25 per transaction charge will impact them hard.

If the idea is to push people to use less cash, this should happen over a period of time in a gradual manner. By suddenly imposing charges on every ATM cash withdrawals, SBI seems to be in a hurry to drive away the common man from its branches and ATMs. With a major shift to a cashless society is still away, ATMs continue to be the favourite options for the common man to draw cash. In this context, SBI’s move to impose charges on ATM cash withdrawals is illogical and will hurt the common man.

SBI clarification: Later SBI clarified that the Rs 25 per ATM transactions is only for SBI Buddy customers and not for all customers. The bank also clarified that the limit of 4 ATM withdrawals in a month only applies to the Basic Savings Banks deposit account. All Normal Saving Bank accounts will continue to get 8 free ATM transactions (5 SBI ATMs + 3 other bank ATMs) in Metros and 10 free transactions in Non Metro (SBI ATM + 5 Other Bank ATMs) free apart from the bank transaction.

Updated Date: May 11, 2017 18:08 PM

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