Most of us have bank accounts but how many of us are aware of the ingenious ways in which banks collect fees from us? The truth is that as far as banking services are concerned, nothing comes free these days. Banks charge a fee for carrying out standing instructions, they impose a penalty for excess debit entries in our savings bank accounts, collect a fee for processing your loan and also for closing your loan account early. They also impose a penalty if we do not maintain a minimum balance in our account.

Ironically, the consumers who are supposed to pay these charges are mostly kept in the dark. Banks even revise these charges without any notice or intimation to the consumer and then collect a hefty penalty. It is no wonder that the Banking Ombudsman received as may as 2,594 such complaints in 2006-2007 and this went up to 3,740 in 2007-2008.

Let me quote a complaint resolved by the Ombudsman on the issue. A consumer had taken a housing loan of Rs 3 lakh at an interest rate of 12.25 per cent. Subsequently, when the bank revised its interest rate to 7.75 per cent, the customer requested that he be charged at that rate and when the bank refused, got a loan from another bank and foreclosed this account. The bank charged him a penalty of Rs 5,242 as pre-closure charges. In this case, the Ombudsman held that neither the sanction letter nor the subsequent communications from the bank made any mention of foreclosure charges. So, the bank cannot collect such a charge.

The banks have all voluntarily adopted the Code of Bank’s Commitments to Customers formulated by the Banking Codes and Standards Board of India (BCSBI). The code, for example, says that banks will display in all their branches the charges leviable vis-à-vis non-compliance with the minimum balance rule in savings bank accounts. The code also promises that banks will notify upward revision in charges a month in advance. The code also claims to deal “quickly and sympathetically” when things go wrong by correcting mistakes promptly “and cancelling any bank charges that we apply due to our mistake”. But these are practised by banks more in the breach.

It’s time consumers forced banks to comply with their own code. One way is to know all about the code and the other is to lodge a complaint before the Ombudsman for violations of the code. I would suggest a visit to the RBI website. It would be of great help.