With the beginning of the festive season and the new financial quarter, many important and far-reaching changes are going to come into effect in the country's banking system from October 1. The new guidelines issued by the Reserve Bank of India (RBI) and the policies being implemented by various commercial banks are going to have a direct impact on the pockets of crores of general account holders, working class, senior citizens and investors of the country. These include sensitive issues like determination of interest rates on bank fixed deposits (FD), transparency rules, monthly free limit for withdrawing cash from ATM and additional charges imposed on it.
These new rules will be equally effective on the bank branch network spanning from metropolitan cities like Delhi, Mumbai, Kolkata, Chennai to rural and semi-urban areas of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh and Uttarakhand. Financial experts believe that in the digital age, it is very important for every citizen to be aware of these changes, so that any kind of unexpected financial shock or bank penalty can be avoided at the beginning of the month. While on one hand the objective of RBI is to bring transparency in the banking system and protect the interests of customers, on the other hand the strictness being taken by some banks regarding ATM service and transaction limits can affect the everyday budget of common consumers.
The most prominent topic among the changes coming into effect from October 1 is related to the interest rates of Fixed Deposit (FD). The Reserve Bank of India (RBI) has revised the deposit interest rate framework for all commercial banks, small finance banks, regional rural banks (RRBs), local area banks and urban co-operative banks. Under the new rules, it has now been made mandatory for banks to offer the same interest rate on FDs of the same date and same tenure in all their branches. In the past, it was often seen that some bank branches used to offer different interest rates at their local level or to selected customers, but now this branch-level discrimination will be completely eliminated.
According to the new instruction of RBI, now banks will have to publicly display their normal FD rates in advance. Additionally, single deposits of Rs 3 crore or more are now classified as 'bulk deposits'. Banks are required to upload the revised interest rates for bulk deposits on their website by 10:00 am on every working day (with a maximum grace period of 10 minutes i.e. up to 10:10 am). The rates published on the website will be applicable to all eligible depositors.
The relief for common retail investors is that those who have already booked their FDs will not have any negative impact on their current interest rates and maturity returns, as they are protected by the terms of the contract. However, customers opening new FDs or auto-renewing after October 1 will get returns only under a completely transparent and revised system.
The new guidelines regarding the rules for withdrawing money from ATM have become a topic of discussion in many other financial institutions including the country's largest government bank, State Bank of India (SBI). Banks are more strictly enforcing the limits on free ATM transactions available under Basic Savings Bank Deposit (BSBD) and Jan Dhan accounts as well as salary package accounts.
BSBD account holders get the facility to withdraw free cash from their bank's ATM or other means maximum 4 times in a month. Now after exceeding the limit of 4 free transactions, Rs 15 per withdrawal plus applicable GST will be deducted as additional fee. This rule will also be applicable to cash withdrawals done through Aadhaar Enabled Payment System (AePS) and Mini-ATM. However, financial transactions done through digital means like UPI, net banking and mobile apps will remain completely free.
Along with this, the process of controlling the number of free transactions at ATMs and Automated Deposit and Withdrawal Machines (ADWMs) of other banks for salary package account holders has also been expedited. If customers use ATMs of other banks more than their prescribed monthly quota (3 free transactions in metro cities and 5 free transactions in non-metro cities), they may have to pay up to Rs 21 plus taxes per financial transaction. This step of banks is being seen in the direction of discouraging cash operations and promoting digital payments.
Banking transactions are not limited only to ATMs and FDs, but from October 1, there is going to be a big technical guard on One Time Password (OTP) and transactional alerts coming during digital transactions. Under the new security rules of Telecom Regulatory Authority of India (TRAI), all telecom companies and banks will have to implement mandatory pre-tagging and traceability system for bulk SMS and OTP.
The primary objective of this new system is to crack down on cyber fraud, fake bank calls and scammers who empty accounts by sending links. Now any web link, APK file link or helpline number sent within any message sent by banks and financial institutions should be pre-registered in the secure whitelist of the telecom companies. If the format or URL of any message does not match the authorized database, the telecom system will block that SMS and it will not reach the customer's phone.
This means that bank customers will now receive the OTP received during online shopping, net banking login or fund transfer from a more secure network. Also, bank customers have been advised to keep the correct and active mobile number updated in their bank account, so that no important financial message gets stuck due to technical scrubbing.
Amidst these sweeping changes in banking rules, common citizens need to bring some discipline to their financial habits. First of all, if you depend heavily on ATMs for cash, then assess your expenses at the beginning of the month and instead of withdrawing Rs 500 or Rs 1000 repeatedly, withdraw the required amount in one or two times, so that the free ATM transaction limit is not exhausted. Use UPI and merchant QR codes for small payments with no withdrawal fees.
Take the second important step regarding your savings. If you are planning to invest in fixed deposits, then compare the current interest rates of different banks before October 1. Since banks adjust their rates from time to time based on the repo rate and liquidity review by RBI, it may be a wise decision to secure the higher interest rates currently being offered. Senior citizens in particular get the benefit of additional 0.50% to 0.75% interest should they choose at the right time. Also, check your bank account KYC details and mobile number immediately so that you receive OTP and security alerts seamlessly.