Rbi Asks Banks Not To Charge Fees For Electronic Clearing

The Reserve Bank of India has directed the Indian Banks Association (IBA) to issue notification to all banks advising them not to charge any service fee from customers availing the electronic clearing service (ECS).

The directive was in response to banks levying a service charge for crediting warrants of Unit trust of India (UTI). IBA has accepted procedural lapses by some of its member-banks, and have asked them to stop levying such charges.

RBI, to speed up cheque clearing systems and reduce fraudulent encashment of cheques, had introduced the ECS system some time back. However, banks levied service charges despite a RBI directive to the contrary.

 

All India Bank Depositors Association (AIBDA) had raised the issue with the IBA, the RBI and the Unit Trust of India (UTI). AIBDA argues that bank account holders should not be penalised for availing the new credit clearing system. The association says that ECS system should not be charged as banks did not levy charges for collecting cheques payable at par.

Responding to AIDBA representations, the apex bank, in a strongly worded letter to the IBA, has directed the association to issue notification withdrawing charges on the ECS.

"Popularisation of ECS is one of the priority areas of RBI. The banks are not supposed deduct any service charges as per the procedural guidelines on ECS, and any such deduction will discourage the customers from joining the scheme, says the letter written by the RBI to IBA. However, several banks continue to levy charges for the ECS, says AIDBA even after acceptance of procedural lapses by IBA and an instruction to stop the same.

IBA has written to the Unit Trust of India that it has informed all member-banks not to deduct any service charges from the customers while crediting the amount of dividend, interest etc. received through ECS AIBDA has also written to the UTI asking it pay the charges instead of passing the same to unit holders.

The association has also threatened to drag the issue to MRTP commission if UTI does not change its stand.

The letter by AIDBA to the UTI says: "The position taken by IBA on direct credit by UTI that it will levy service charges, although no mandate or standing instructions have been given to the bank by the depositors directly, is totally wrong.

The unit holder responds to a request by UTI to indicate the bank branch and account number to credit warrants. If at all the bank wants to levy charges for this , UTI will have to pay for this, not the unit holders. You have to sort out the matter with the IBA." IBA is acting as a cartel, and UTI will be accused of conniving with this cartel if IBA is dragged to the MRTP commission. UTI should not allow its image to be damaged", adds the letter.

IBA has written to the UTI that it has informed all member-banks not to deduct any service charges from the customers while crediting the amount of dividend, interest etc received through ECS