During Covid times, banks imposing higher processing fee, interest to mint money at the cost of customers

Even when the common man is reeling under the after effects of the pandemic times, private and public sector banks are busy minting money at the cost of their customers.

Banks are using all possible methods, from convenience fee on recycler machines to processing fee, to extract extra money from its customers.

According to the new norms of ICICI Bank starting from November, a convenience fee is being charged from its customers for depositing cash in recycler machines after business hours on normal days, and on bank holidays. 

Not just private banks but public banks are also not far behind in extracting extra money from its customers.

Recently Bank of Baroda announced to impose higher cash handling charges on customers only to later announce it was withdrawing the decision.

This move by BOB forced Ministry of Finance to issue a clarification that no public sector bank has increased such charges and the ministry has been informed by banks that they are not planning to raise charges in the near future.

However ICICI Bank has not withdrawn the convenience fee it has imposed.

'Effective November 1, a convenience fee of Rs 50 per transaction, will be levied on cash deposited in the cash acceptors/ recycler machines on bank holidays and between 6 PM and 8 AM on working days,' ICICI Bank said in a communication to its customers.

'The convenience fee would be applicable if the cash deposit in the cash acceptor / recycler machines exceeds Rs 10,000 per month either as single transaction or multiple transactions,' the lender added.

Private banks also used the one-time debt recast scheme approved by the RBI in August, to help the people amid coronavirus crisis, as an opportunity to make money.

The scheme approved by RBI was applicable for all borrowers who were affected by coronavirus outbreak.

It is to be noted that some private banks are charging a fee as high as 0.5 per cent of the loan outstanding, said banking industry sources.

Some lenders have also announced to waive processing fee on fresh loans, fully or partially, particularly during this festive season.

Both public and private banks are also charging higher interest rates for the debt recast. State Bank of India is charging an additional 35 basis points (bps) while majority of private banks are charging up to 50 bps higher rate. 

Banks are justifying the move by claiming that they are charging higher rates as there is a provision requirement of 10 per cent for the loans that are restructured.

Sources said that some private banks are charging 50 bps more for loan recast, while some are also charging as high as a full percentage point.