Faced with a rising number of customer complaints on excessive charges levied by different

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banks, the Reserve Bank of India (RBI) has asked the Indian Banks’ Association (IBA) to come up with a framework on what banks should charge from their customers.

According to the annual report of the RBI banking ombudsman, complaints against banks have increased. Foreign banks topped the list with a 91 per cent rise in complaints against them, followed by Indian private banks that have seen a 58 per cent increase in such complaints. Public sector banks have witnessed a 29 per cent

increase.

Complaints relating to credit cards (25.50 per cent of the total) were the highest in 2008-09, rising 74 per cent over the previous year, the report said.

The banking ombudsman is a senior official appointed by Reserve Bank of India to redress customer complaints against deficiency in banking services.

Though the central bank had advocated reasonability of service charges for demand draft as early as February 2007, it did not prescribe any explicit thresholds or measures of reasonability.

The banks are, therefore, left to fix charges that suit their needs and this resulted in arbitrariness.

“There is wide disparity between what different banks charge for different services. The Indian Banks’ Association committee will come up with caps on what banks can charge for basic services,” a senior RBI official said on the condition of anonymity.

For instance, the State Bank of India charges Rs 75 per year for non-maintenance of minimum balance while its private counterpart ICICI Bank charges Rs 750 per quarter. Foreign player Citi Bank charges Rs 1,500

per quarter.

The central bank recently issued a letter to the association, asking to disclose service charges on their websites.

“The penalties for non-maintenance of minimum balance are also steep for private and foreign banks. Deficiencies of services pertaining to credit cards and personal loans still make up for a major share of the grievances,” the official said.