Wednesday, October 7, 2015

Need for intervention of Reserve Bank of India to put a stop on the unfair business practices of the Commercial Banks on a/c of SMS Alert Fee amounting to estimated Rs. 5,000 crores in a year

This is in continuation to my article titled "Unethical business revenue by banks on account of charging SMS Alert Services" was brought out on this blog on 5th April 2014 and 28th August 2014. The link to the article is: 
Subsequent to the article, Reserve Bank of India has now been requested vide my letter dtd. 03/08/2015 to intervene in the matter and direct all Banks to refund amount to the account holders earned out of unethical business business in violation of RBI regulations. A copy of the letter requesting RBI and other Departments is quoted below:

" Date: 03/08/2015

Chief General Manager
Reserve Bank of India
Consumer Education and Protection Department,
Central Office, First Floor, Amar Building,
Perin Nariman Street,
Mumbai – 400 001

Sub: Charges levied by Banks for sending SMS Alerts

Dear Sir,

Please refer to RBI Circular No. RBI/2013-14/381 DBOD. No. Dir. BC. 67/13.10.00/2013-14 dated 26/11/2013 on the above subject.

While RBI stipulate banks to charge SMS Alert Fee on actual usage basis, the banks are charging fixed quarterly amount and deducting from the accounts irrespective of whether there has been any transaction or not. I have accounts with State Bank of India, Punjab National Bank and UCO Bank all three PSUs. Since the accounts were being depleted by the first two banks without any transaction, I had initiated RTIs against both banks. 

I am attaching herewith responses of State Bank of India and Punjab National Bank which clearly substantiate adapting of unfair business practices being carried out by the banks. It can be seen that despite no transactions being carried out by me, the banks have been deducting amount from the accounts every quarter. Even for sending one or 2 messages, banks have deducted Rs. 16.85 per quarter. The undersigned has also an account with UCO Bank and UCO Bank seems to the exception as they are charging Rs. 0.12 per transactional SMS. RTI also reveals information that State Bank of India is making up on an average Rs. 70 crores per quarter alone towards charging of SMS alerts since November 2013, the figure of Punjab National Bank is yet to be revealed. Very rough estimates put such a figure of more than Rs. 5,000 crores a year across the banking industry.

It is also understood that Ministry of Finance has also issued directives to all the banks to follow RBI directions. A copy of Ministry of Finance order no. F.No. 7/72/2014-BOA dated 14/08/2014 as downloaded from the public domain (facebook) is attached for your ready reference. RBI is requested to kindly issue such directives to all the banks for refund of the amount unethically deducting from the consumers bank account including that of mine in PNB as well as SBI.

Thanking you,

Yours sincerely


Email Id:

Copy to 1. Secretary, Department of Financial Services, Ministry of Finance, Jeevan Deep 
Building, 3rd Floor, Parliament Street, New Delhi-110 001
2. Secretary, Department of Consumer Affairs, Ministry of Consumer Affairs, Food & 
Public Distribution, Govt. of India, Krishi Bhawan, New Delhi-110 001


I would request rather appeal to all members to make a request to their banks for refund of the amount deducted by them on a/c of SMS alert fee. The machinery has already been set into motion and your complaints/ emails shall expedite/ facilitate achieving objectivity.

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