Bank Income Sources: Bank coffers are not filled only with loan interest! From ATM charges to commission, know through 7 ‘secrets’ of bank’s earnings.

Lucknow. Whenever there is mention of bank’s earnings, the first thought that comes to our mind is the huge interest charged on home loan or car loan. We think that banks earn profits only from interest, but the reality is much more interesting and broader than this. In today’s modern era, banks are not dependent only on interest, but a large part of their earnings comes from “non-interest income” (income other than interest). This is the reason why even when the Reserve Bank reduces the repo rate or the interest rates come down, the profits of the banks remain at record levels. Come, in the reporter style of Amar Ujala, understand how banks earn billions, from small charges deducted from your pocket to big corporate deals. 1. Fees and service charges: Small drops create a sea of ​​earnings. Banks charge a fixed fee for every small task they get from you. This amount may seem small to you, but by connecting with crores of customers, it becomes a huge income:ATM Charge: Fee charged for withdrawing money more than the prescribed limit.Penalty: Penalty for not maintaining minimum balance (AMB) in the account.Annual Fee: Annual charge on your debit and credit cards.Convenience Fee: Charges for services like SMS alerts, issuance of check book and duplicate statement.2. Loan Processing and Prepayment Charge: Earning even before the interest starts. Banks do not only make money from the loan installments (EMI), but their earning starts as soon as the loan process starts: Processing Fee: While approving the loan, banks charge file charge or processing fee, which can run into thousands and lakhs. Foreclosure Charge: If you want to repay your entire loan before time, then many banks charge ‘prepayment’ instead. ‘Penalty’ is charged.3. Treasury and Smart Investment: Profiting from market movements Banks do not just distribute the money you deposit in loans. They invest a large part of that money in safe instruments like government bonds, treasury bills and stock market. When there are fluctuations in interest rates in the market, banks earn huge profits (Trading Profit) by buying or selling these investments at the right time.4. Forex and Foreign Transactions: Income from Cross BordersIf you exchange currency (dollars, euros etc.) for travel abroad, banks add their margin to the exchange rate. Apart from this: Fees charged on remittances coming from abroad. Heavy commission charged for issuing LC (Letter of Credit) in export-import business.5. Bancassurance: Insurance and Mutual Fund Commission Nowadays, whenever you go to a bank, the manager advises you to take an insurance policy or mutual fund. Actually, banks work as an ‘agent’ for these companies. Whenever a customer buys an insurance or investment plan through a bank, the bank gets a huge commission from that company. This is called ‘bancassurance’ model in the language of banking.6. Digital Payments and Merchant Services: In the era of cashless economy, digital transactions have become a strong pillar of income for banks. Banks charge a small ‘Merchant Discount Rate’ (MDR) or transaction margin on every transaction made through POS machines installed at shops and online payment gateways. Even though UPI is free for the common man, banks are continuously earning money through other digital channels.7. Investment banking and advisory: These earnings are away from the eyes of ordinary customers. Big banks play the role of advisors in IPO of companies, merger of two companies or big corporate deals. In exchange for these high-profile deals, banks charge advisory fees worth crores of rupees.