The State Bank of India (SBI) is yet to return Rs164 crore of the undue fee charged from the account holders of Pradhan Mantri Jan Dhan Yojana (PMJDY) towards digital payments during April 2017 and December 2019, a report prepared by IIT-Mumbai said.
"On directions from the government, SBI has returned just about Rs 90 crore, thereby withholding the bigger chunk of at least Rs164 crore with itself," the report added.
The report said that during April 2017 to September 2020, SBI had collected over Rs254 crore towards at least 140 million UPI/ RuPay transactions by charging Rs17.70 per transaction on BSBDA (Basic Savings Bank Deposit Account) customers under PMJDY.
Since 1 June 2017, unlike any other bank in India, the report said, SBI charged Rs17.70 for every debit transaction beyond four transactions per month.
Debit transaction means any withdrawal transaction that includes cash withdrawal, Unified Payments Interface (UPI), Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS) pre-authorised standing instruction, cheque, etc.
This has adversely impacted the vulnerable, gullible and marginalised BSBDA customers of SBI who, on the call of the government and RBI (Reserve Bank of India), embraced digital means of financial transactions.
"Due to this attitude of SBI and subsequent to RBI remaining non-committal, in mid-August 2020, the Finance Ministry was approached for addressing the concern. The Ministry was prompt in their actions and the CBDT by end-August 2020, advised SBI to refund the charges collected since 1 January 2020 on transactions carried out using the prescribed digital payment modes," the IIT-Mumbai report said.
On 30 August 2020, the Central Board of Direct Taxes (CBDT) advised banks to refund the charges collected since 1 January 2020 on transactions carried out using the prescribed digital payment modes that include the UPI and the RuPay debit card, and not to impose charges on future transactions carried out through such modes.
In adherence to the CBDT directive, as late as 17 February 2021, SBI initiated refund of Rs17.70 for the UPI and RuPay debit card digital transactions to the BSBDA customers, the report prepared by Ashish Das, professor of statistics said.
Levying of charges on BSBDA is guided by September 2013 RBI guidelines. As per the banking regulator’s direction, these account-holders are 'allowed more than four withdrawals' in a month, at the bank's discretion provided the bank does not charge for them.
It may be recalled that we had reported about the study by IIT Bombay in April 2021 which had revealed that several banks, including SBI, have been imposing excessive service charges on zero-balance
or basic savings bank deposit accounts (BSBDA). In fact, SBI alone collected almost Rs300 crore over the past five years from these zero-balance or basic accounts.
Subsequently, in the wake of this study by IIT Mumbai in April, SBI had issued a clarification saying it has refunded charges
deducted on digital transactions from zero balance or BSBDA- holders. The State-run lender had said in a release back then “In terms of Central Board of Direct Taxes (CBDT) directives, SBI has refunded the charges recovered in respect of all the digital transactions to the BSBD customers from 1 January 2020 to 14 September 2020. SBI has stopped recovering charges in such accounts on all digital transactions from 15 September 2020, while retaining charges on cash withdrawals over and above four free withdrawals allowed per month. The objective is also to encourage BSBD account holders including Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders to adopt digital payment through the prescribed modes vis-à-vis the cash transactions.”
SBI was, however, curiously silent on the question of reasonableness in fixing a charge of Rs17.70 for every digital transaction. The question still remains about how SBI could have been compliant with RBI’s August 2012 and July 2015 mandates on “Principles for ensuring reasonableness in fixing the service charges”? Such reasonableness of charges was to be ensured by the Banks’ board of directors based on the regulatory principles as mandated by RBI.
Whenever SBI has imposed a charge of Rs17.70 for an unassisted digital debit transaction, that cannot be considered reasonable and, thus, is in breach of RBI’s July 2015 mandates.
Accordingly, SBI should refund such charges recovered in respect of all the digital transactions to the BSBDA customers not only with effect from 1 January 2020 to 14 September 2020, but with effect from 15 June 2016 onward. The essence of the IIT-B report in April 2021 captured this aspect.
SBI’s clarification in April 2021 also suggests that the Bank has primarily refunded the charges for select digital modes, as directed by CBDT. The select digital modes are, UPI/BHIM-UPI and RuPay digital payments.
The IIT-B report had expressively indicated that SBI considers it appropriate not to refund the charges recovered in respect of all the digital transactions to the BSBDA customers prior to January 2020, despite having charged as high as Rs17.70 per digital debit transaction. Such a charge can neither be considered reasonable nor can it be attributable to customer-centricity.
SBI is the largest commercial bank in terms of assets, deposits, branches, customers, and employees. It is also the largest mortgage lender in the country.