Indian Banking Service Charges: What You Should Know

In India, banks provide a wide variety of services — from savings accounts, current accounts, ATM withdrawals, fund transfers, cheque handling, locker facilities, and more. For many of these services, banks levy charges (service fees, penal charges, processing fees). However, these charges are not arbitrary — they are subject to certain oversight and guidelines issued by the Reserve Bank of India (RBI). The idea is to ensure fairness, transparency, and reasonableness in what banks charge their customers. . The answer of below questions we can find out from this article. In this blog, we will walk you through: What RBI’s regulatory stance is on bank service charges Common types of service charges that banks levy Sample charges (across a few major banks) What customers should watch out for A concluding takeaway

10/3/20252 min read

RBI’s Regulatory Framework: What Are the Guardrails?

Before diving into specific charges, it’s important to understand what RBI mandates or expects from banks when they levy fees. Some key points:

  1. Disclosure & Display
    Banks are required to display and maintain updated details of service charges on their websites, and prominently place them under a “Service Charges / Fees” section on their homepage for easy customer access. Reserve Bank of India

  2. Reasonableness & Not Penalizing Low Activity Customers
    While banks have the discretion to fix their charges, RBI expects that charges should be “reasonable” and not excessively punitive, especially for customers with low transaction volume. Reserve Bank of India+1

  3. Advance Notice for Changes
    Whenever banks revise their charges, they must inform customers in advance—usually at least one month before implementation. Digital Sansad+1

  4. Penal Charges in Loans
    A recent RBI circular (RBI/2023-24/53, dated August 18, 2023) emphasized that penalties charged for breach of loan contract terms are “penal charges,” not “penal interest.” Banks cannot capitalize (i.e. charge interest on the penalty itself). 

  5. No Charges on Inoperative Accounts for MAB
    If an account becomes inoperative (dormant), banks are not permitted to levy penal charges for non-maintenance of minimum balance, and they cannot charge for reactivating such accounts.

  6. Caps and Limits (e.g. ATM charges)
    RBI has set caps on certain charges – for example, ATM transaction fees beyond free limits cannot exceed Rs 23 per transaction (effective May 1, 2025).

Banking Service Charges 

  1. Account Maintenance Fee

    • Some banks charge a monthly or yearly fee to keep your account active.

    • Example: ₹100 per quarter for savings accounts with low balance.

  2. Minimum Balance Penalty

    • If you don’t keep the required average balance in your account, the bank deducts a penalty.

    • Example: If minimum balance is ₹5,000 but you maintain only ₹2,000, a charge may apply.

    • Minimum Balance charges depends on bank minimum balance criteria 

  3. ATM Withdrawal Charges

    • Limited free withdrawals allowed per month. Beyond that, banks charge per transaction.

    • Example: First 5 withdrawals free, then ₹20 per transaction.

  4. Cheque Book & Leaf Charges

    • Some banks give free cheques up to a limit. Extra cheque books or leaves may be charged.

  5. NEFT/RTGS/IMPS Charges

    • Online money transfers may be free in digital mode, but at the branch, charges can apply.

    • Example: ₹2.50 to ₹25 depending on the amount.

  6. Cash Deposit & Withdrawal Charges

    • Cash deposits/withdrawals are free up to a limit. Extra transactions may attract charges.

  7. SMS/Alert Charges

    • Banks may charge for SMS alerts on transactions, though many are moving to free app notifications.

  8. Debit Card Annual Fee

    • Most debit cards have a yearly fee (₹150–₹500), except basic cards linked to zero-balance accounts.

  9. Other Miscellaneous Charges

    • Duplicate passbook, signature verification, balance certificate, and locker services often carry fees.

What Should a Customer Watch Out For?

Always read the fee schedule: Before opening any account or taking a loan, carefully check the bank’s published service charges.

  • Free transaction limits: Understand how many free ATM, non-financial, fund transfer, cheque leaves are included; once exceeded, higher charges kick in.

  • Advance notice of changes: Banks must notify at least one month before changing any fee, so keep an eye on communications (SMS, email, website).

  • Check for hidden costs: Sometimes what looks “free” (e.g. transfers) may incur charges under certain conditions (branch, off-peak, etc.).

  • Raise grievances where needed: If you feel charges are unfair or undisclosed, you can approach the banking ombudsman or file a complaint with RBI.

  • Watch for regulatory changes: RBI often revises or issues new guidelines (for example the recent change in ATM fee cap). Stay updated.

Conclusion

Banking service charges are an inevitable part of using financial services in India, but they are not arbitrary or unconstrained. The RBI’s guidelines insist on transparency, disclosure, fairness, and customer protection. While banks have leeway to set their own rates, they must comply with regulatory mandates such as advance notice, not capitalising penal charges, and ensuring charges are reasonable.

To the customer: being aware is your best defense. Always review the schedule of charges before engaging in any transaction, compare across banks, and don’t hesitate to raise queries if a fee seems unclear.