Banks in our country are facing a liquidity crunch thanks to the rising pile of bad loans and poor recoveries. So what do they do to keep their kitchen fire burning? They turn to customers to earn more money by levying different kinds of fee for the variety of services they provide.

While most banks have failed to come up with creative ideas to ensure higher recovery of bad loans, they have been extremely creative when it comes to charging customers for the various services they provide. The latest idea being contemplated by banks is to charge customers for withdrawing money at ATMs after they have been asked to raise security measures at over the 1.65 lakh ATMs across the country.

The move comes after a woman was attacked inside an ATM in Bangalore in November which was captured on CCTV cameras and the state governments have been in talks with banks and the RBI to provide better security arrangements of customers at ATM kiosks.

Banks may now be required to install CCTV cameras inside and outside all the ATM kiosks, deploy security guards who will be present round the clock, remove posters from the kiosk windows to ensure better visibility, etc to ensure that the November episode is not repeated.

While clear details about this new move are yet to emerge, bankers have already begun punching numbers on their calculators to arrive at the total cost, cost per transaction, cost per month, cost per customer, and a whole list of costs that is set to hurt the profitability of their banks if and when these measures are introduced.

Given that the banks are facing a tough time already, it is not exactly the best time for them to be incurring these ‘additional’ costs and so they are mulling over the possibility of passing the cost parcel on to the customers.

As of now, customers don’t have to pay up any charges for making transactions in their bank’s ATMs. In addition, first five transactions every month at other banks’ ATMs are also free but these ‘facilities’ may soon become passé: you might have to pay a fee.

Banks have already begun in talks with the Indian Banks’ Association (IBA) and might soon come out with their catalogues of this new set of “service charges” that customers will have to cough up.

“Hiring trained guards for three eight-hour shifts, procuring arms licences, installing cameras inside and outside the ATM and connecting alarms to the nearest police station will have huge cost implications for banks,” a senior public sector bank official was quoted as saying.

There are no free lunches. Agreed. But according to consumer rights activists, businesses should know where to draw the line. Ensuring customer safety at an ATM shouldn’t be seen as a ‘service’ provided by a bank, they argue –instead, it should be done as a basic courtesy extended to customers.

At present, the list of services provided by banks is exhaustive, and so are the ‘minimum’ charges levied on them. And then there are also the service taxes to pay up. Whether it includes an annual fee for a debit/credit card one uses or allowing one to make online transfers, each and every service is charged. Ask a banker what sense do these charges make and the almost immediate and obvious response is “convenience for customers”, conveniently discounting the fact that these services also mean convenience for banks.

Having introduced online transfer of funds and ATM, banks have done away with those huge overhead costs of setting up brick and mortar branches, hiring manpower, electricity bills, etc, say consumer activists.

Speaking about the unfair and unreasonable service charges levied by banks, Divakar Babu Chennupati, secretary of the Consumer Guidance Society says, “The increasing integration of information technology in the banking industry has cut down their costs on many fronts and in spite of this, banks have been non-transparent in the slapping of service charges at an unreasonable rate.”

He also says that there are various instances where banks start by providing various services like internet banking, SMS facility, online transfers etc., free of cost and suddenly slap service charges without informing the customers because they make a mention of this possibility in the KYC forms.

Adding that the concept of service charges is detrimental to the agenda of financial inclusion, Chennupati says. “In rural India the density of banking branches and the number of rural consumers having banking accounts is woefully inadequate,” he says. “Despite all this, private and public banks are penalizing rural consumers for not keeping minimum balance and which is ex-facie unreasonable.”

Hence, a few hundred rupees as service charges per month wouldn’t hurt the rich but is certain to burn a hole in the pockets of the relatively poor customers and so a careful assessment of various service charges is necessary, he says. “Absolute transparency in charging various services is a must for a customer to feel that he is not taken for a rough ride. The policy and regulations should address at creating safety nets for the poor in the banking industry for enhancing the access of banking services to the vulnerable sections,” Chennupati says.