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State Bank of India has decided to make inter-core transactions ‘at par’, that is, free of charges, with immediate effect.
The revised charges shall be effective from the date of issuance of the relevant circular, which is June 18 (Monday).
The revised instructions are being put in place in the system by the bank’s IT department.
The revised charges shall be effective from the date of issuance of the relevant circular, which is June 18 (Monday).
The revised instructions are being put in place in the system by the bank’s IT department.
RATIONALISATION EFFORT
Branches have been told to ensure manually that no service charge is recovered for all inter-core transactions till it is enabled in the system.
This is part of a drive for rationalising service charges launched by the bank. Earlier, the bank had announced waiver of charges for non-maintenance of minimum balance.
The June 18 circular recalled demand from business groups, strategic business units and various operating units for reduction of charges for inter-core transactions.
The existing inter-core charges were perceived to be high compared to other banks. A reduction would help raise business growth, particularly in the area of generating float funds.
Higher inter-core charges have resulted in some customers across segments opening accounts in other banks to remit funds to their beneficiary’s account in SBI.
This is part of a drive for rationalising service charges launched by the bank. Earlier, the bank had announced waiver of charges for non-maintenance of minimum balance.
The June 18 circular recalled demand from business groups, strategic business units and various operating units for reduction of charges for inter-core transactions.
The existing inter-core charges were perceived to be high compared to other banks. A reduction would help raise business growth, particularly in the area of generating float funds.
Higher inter-core charges have resulted in some customers across segments opening accounts in other banks to remit funds to their beneficiary’s account in SBI.
FLOAT FUND
This had resulted in loss of float fund available, apart from leading to migration of business to other banks.
“Complete waiver of inter-core charges will help us in to compete with private sector and public sector banks in mobilising CASA deposits,” the circular said.
Besides, this will also give the bank a competitive edge in attracting new customers, it added.
The circular recalled that the bank has been taking several steps to migrate customers to electronic/alternative channels for meeting their banking needs.
“Complete waiver of inter-core charges will help us in to compete with private sector and public sector banks in mobilising CASA deposits,” the circular said.
Besides, this will also give the bank a competitive edge in attracting new customers, it added.
The circular recalled that the bank has been taking several steps to migrate customers to electronic/alternative channels for meeting their banking needs.
GREEN BANKING
This would also help in green banking. Despite several initiatives, paper-based transactions still dominate banking transactions.
However, with the bank being fully on CBS platform with real-time transactions facilities, a need has been felt to take steps for popularising electronic banking.
Accordingly, necessity has been felt to revisit the service charges for inter-core transactions.
There have been demands from customers for reduction in the inter-core charges.
Inter-core transactions relate to all transactions including deposit, withdrawal, transfer from/to non-home branch accounts at a different centre. Non-home branches are those used by depositors with accounts in other branches or banks.
However, with the bank being fully on CBS platform with real-time transactions facilities, a need has been felt to take steps for popularising electronic banking.
Accordingly, necessity has been felt to revisit the service charges for inter-core transactions.
There have been demands from customers for reduction in the inter-core charges.
Inter-core transactions relate to all transactions including deposit, withdrawal, transfer from/to non-home branch accounts at a different centre. Non-home branches are those used by depositors with accounts in other branches or banks.
What’s inter-core?
Inter-core transactions include:
Deposit of cash at non-home branches;
Deposit of cheques at non-home CBS (core banking solution) branch drawn on any CBS branch/other banks;
Deposit of clearing instruments at non-home CBS branch drawn on non-CBS branch/other banks;
Encashment of cheques at non-home branch;
Transfer of funds from home branch to third party accounts at another CBS branch; and
Pass Book updation at non-home branch.
Having rolled out CBS branches across the country, the bank has been leveraging it to ramp up its fee-based income.
But, according to latest SBI circular, the much cheaper NEFT/RTGS platform has been taking away to other banks significant business that would otherwise have accrued to it.
This is what prompted it to offer complete waiver of charges on the inter-core transactions.
vinson.kurian@thehindu.co.in
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