Banks charge customers a large number of hidden charges and fees, and the customers don’t even know, said AAP Rajya Sabha MP Raghav Chadha at the parliament. Chadha pointed out that banks charge hidden fees for minimum balance, for extra ATM usage, for account inactivity, for issuing a bank statement, for SMS alerts, for online NEFT transactions, and even if the customer wants to change something as simple as a signature or a nominee detail.
The AAP MP said it is important to speak about the hidden charges and fees so that the common man as well as the finance minister come to know about it. “I hope that the list of charges that I am about to talk about reaches the Finance Minister so that the common man comes to know how these banks are burning a hole in their pockets,” he said.
“First is the minimum balance penalty. If you don’t maintain a minimum balance, the bank would cut anything between Rs 100-600. After charging customers for minimum balance, the banks have made Rs 3,500 crore in FY 2022-23.
Second is extra ATM usage. You are allowed two to three ATM transactions per month, but if you exceed it, do a fourth or a fifth transaction, then you are required to pay Rs 20 per transaction.
Then there is an inactivity fee, which is Rs 100-200 every year. This means that if you are not using the account a lot then you have to pay an inactivity fee,” he said.
“Now, if you need a bank statement, then the bank will charge you a bank statement issuance fee, which is Rs 50-100. Then, say, you want to know how much is being credited and debited in your bank account through SMS alerts, the bank will again charge you Rs 20-25 per quarter for SMS alerts.
If you pay online through NEFT, then you will have to pay a transaction fee. You are forced to take a loan from banks, and then the same bank will charge you 1-3 per cent of the loan amount as loan processing fee. Now, if luck is on your side and you are able to foreclose your loan before the stipulated period, then the loan preclosure charges for early payment penalty will be imposed.
If you want to change the signature or the details of the nominee, the bank will charge you Rs 200 on those changes as well. If you want to make a demand draft or a pay order then the bank will charge you Rs 100-200 per demand draft.
Money is stolen from the customers, and they don’t even know how much money banks take away from them under these charges and fees,” said Chadha.
Chadha also expressed concerns over the erosion of public trust in India's banking system. He attributed this to rising fraud, high loan interest rates, and inadequate financial security for depositors.
Raghav Chadha also criticised the Banking Laws (Amendment) Bill, 2024 as a procedural reform that fails to address the core concerns of citizens. The bill, which allows bank account holders to nominate up to four individuals, was passed by Parliament with the Rajya Sabha approving it through a voice vote. The Lok Sabha had already passed the bill in December 2024.
Chadha, according to an AAP statement, emphasised that banks are not mere financial entities but the pillars of democracy, playing a vital role in people's lives. He claimed that increasing banking frauds, high lending rates, and declining savings interest rates are pushing people away from the formal banking system.