40 years ago...and now: From tellers to clicks

Automated banking is a boon to customers, but it comes at a cost

When Geeta Kumar had to transfer money from Dubai to India almost 30 years ago, the transaction took up almost half a day's work. She had to go to the bank branch, fill the form for transfer of funds and submit it at the bank counter. Then she would have to wait till the bank officials verified all the details and matched the bank codes. Only then could she leave the branch. If she did this in the morning, then money would reach her family in India the same evening.

More recently, when Kumar's children were studying in India, she could transfer money to their accounts sitting in the comfort of her home or office. "Online transfer of funds and utility payments are the features I like best about online net banking. Earlier, such work used to take an entire day. One had to stand in mile-long queues," says the 60-year-old Ernakulam resident. For this convenience, she does not mind paying the Rs 2.5-25 as charges for NEFT transactions, that is, online fund transfer.

Similarly, Mumbai resident Chandresh Joshi does not mind paying Rs 15 per quarter for receiving SMS alerts about his savings bank account on his mobile phone. "I get to know my account balance without any effort. Earlier, I had to go the bank and stand in queue just to get my passbook updated. I don't mind paying the fees if they are reasonable," says 62-year-old Joshi.

Computerisation and automation was an issue that may have raised the hackles of the banking unions but customers who recall the bad old days of non-automated services from rude and inefficient staff aren't complaining. Banking computerisation, which was introduced in the late 1990s, also made it possible for banks to offer new services.

For instance, today you can carry out banking operations from any branch of your bank, and need not visit the branch where you have your account. This is a boon for employees in transferable jobs as they need not open new bank accounts with every transfer. Of course, this comes at a cost. Banks charge you for such non-home branch transactions. In fact, today, even visiting the bank branch more than a certain number of times may attract a fee.

In the 1970s, there was no charge for not maintaining a minimum balance. The only condition was that the account should have Rs 100 if you wanted cheque book facilities. Today, banks charge Rs 100-600 for non-maintenance of minimum balance.

In many cases, banks waive many of these charges for their salary account customers or for those who maintain a certain amount of minimum quarterly balance. A higher balance ensures the bank float money on which they can earn interest, which allows them to waive the fees.

For issuing cheque books, earlier banks used to charge Rs 2 per cheque leaf, after the first free 60 cheque leaves. This charge continues to be the same, though the number of free cheque leaves has come down. Banks used to charge for postal charges earlier as well, though now the charges have increased. These charges are to encourage customers to do more banking transactions online.

"With the spreads between the loan and deposit rates narrowing, banks are looking for ways to increase their income. Hence, they have started charging for the various services they offer," says V N Kulkarni, a former Bank of India official, who is now a debt counsellor with Abhay, a debt counselling centre sponsored by the bank.

New technology meant new services, but also new charges. For instance, ATMs have made it very easy to withdraw money, check account balances and even make utility payments. When ATMs were introduced, in the late 1990s, there was no charge as banks used them as quasi-branches and a branding tool. Subsequently, banks were allowed to charge for non-customers using their ATMs. Now even customers are allowed only five free ATM transactions a month.

Similarly, when banks introduced SMS banking, it was free. But now there is a charge of Rs 15 per quarter. "As banks have spent money on new technology, their operation costs have also increased. So, they try to recover the costs by charging customers for these services," Kulkarni points out.

But any customer who can remember their banking experiences before the late nineties will be profoundly grateful for these changes!

SERVICES THAT HAVE BEEN DISCONTINUED

• Ledger folio services: For current accounts a certain number of entries in the ledger folio were free and above that there was a charge. This was charged when credit and debit entries were done manually
   
• Safe custody of sealed covers and FD receipts: Banks used to accept sealed envelopes, bond and FD receipts for safe keeping at Rs 30 per cover. But this service was discontinued because customers used to keep FD receipts with the bank and if the FD matured the onus was on the bank to inform the customer of the maturity date and so on

SERVICES INTRODUCED RECENTLY

• Cash transactions at base branches, in the same city: Nil for the first four to 15 transactions of a month and Rs 75-90 per transaction thereafter
   
• ATM charges: First five in a month are free. After that up to Rs 20 per transaction
   
• SMS alerts: Rs 15 per quarter