ICICI to raise service charges from 1st August

From August this year ICICI bank the largest private sector bank in the country will be increasing its service charges.

Earlier last month, IDBI (formerly IDBI Bank) had revised its fees. Kotak Mahindra Bank revised fees in January and the State Bank of India raised its service charges in February this year.

With the increase in service charges one will have to pay more money to make a demand draft from one’s bank and a higher penalty if a cheque drawn on or deposited in the bank account is dishonored. Banks are also raising fees for collecting outstation cheques, issuing statement of accounts on ad hoc basis, duplicate passbooks and a host of other services.

Although ICICI Bank, has already increased the average quarterly balance requirement on a regular savings account to Rs 10,000, and have plans to charge Rs 50 per demand draft up to Rs 10,000 and Rs 3 per Rs 1,000 thereafter, subject to a minimum of Rs 75 and maximum of Rs 15,000, from August 1. Currently bank is charging Rs 2 per Rs 1,000, subject to a minimum of Rs 50 and maximum of Rs 10,000.

The bank will be also increasing the price for cheque books. While it is giving 50 payable-at-par cheque leaves every quarter for free, but from now the bank will be distributing only 30 such cheque leaves without any charge. Any additional cheque leaves will cost Rs 2 per leaf. Thus, one will have to pay more if one writes more than 30 cheques in 121 days or one cheque in four days, beginning August this year.

Experts say banks are increasing their service charges to shore up their non-interest income in the current financial year. As the deposit rates are going up and there has been a significant slowdown in credit growth; therefore banks have started feeling the pinch of declining net interest margin. In view of stock market dipping and unprofitable treasury operations following the rise in interest rates, banks are planning to take a hit on income from investments.

“Income from core banking operations is likely to suffer during the first two quarters, at least in the current financial year. Hence, banks are on the look out for increasing their fee-based and other non-interest income,” said M.V. Nair, chairman and managing director of Union Bank of India. According to bankers the cost of deposits is going up, therefore banks are looking to mobilize more low-cost deposits. In view of this Kotak Mahindra Bank and ICICI Bank had already raised the minimum average quarterly balance for their savings accounts to Rs 10,000 earlier this year.