Regulating Basic Savings Bank Deposit Accounts - Do we need to care for these marginalized depositors?

Abstract

Basic Savings Bank Deposit Account (BSBDA) was introduced to financially include our marginalized fellow-countrymen. While defining the features of a BSBDA, the regulatory requirements made it amply clear that in addition to mandatory free banking services (that included four withdrawals per month), as long as the savings bank account is a BSBDA (rather than a non-BSBDA savings bank account), the banks cannot impose any charge even for value-added banking services that a bank may like to offer at their discretion; and RBI considers a withdrawal, beyond four a month, a value-added service. There had been systematic breach in the RBI regulations on BSBDAs by few banks, most notably by State Bank of India (SBI) that hosts the maximum number of BSBDAs, when it charged @ Rs 17.70 for every debit transaction beyond four a month. Such transactions comprised even the non-cash digital transactions done using NEFT, IMPS, UPI, BHIM-UPI and the debit card for merchant payments. This imposition of service charges resulted in undue collections to the tune of over Rs 300 crore from among nearly 12 crore BSBDA holders of SBI during the period 2015-20, of which the period 2018-19 alone saw collection of Rs 72 crore and the period 2019-20, Rs 158 crore. We assess the dereliction in SBI’s duty towards the PMJDY when the BSBDA users were unduly (and against the extant regulations) forced to part with such high charges for their day-to-day (non-cash) digital debit transactions that the bank allowed in a BSBDA. The core contention that is highlighted here has no intention of disrupting or creating any hindrance towards the stability of SBI but rather to support those affected due to non-adherence of a technicality by SBI. This involves over 12 crore savings account holders of SBI who under the PMJDY were brought into the reach of financial inclusion. These relatively vulnerable, gullible and marginalized fellow-countrymen being thrust with charges @ Rs 17.70, every time they transacted digitally (unassisted non-cash means), is shown to be grossly unreasonable, exploitative and unjust.