NRB for removal of additional fees
KATHMANDU:
Depositors will soon be free from paying any additional service charge or fee to maintain a bank account.
Central bank has prepared draft guidelines regarding consumer protection and financial literacy that forbids banks from charging additional service fees from depositors along with making the charges levied on borrowers transparent. Nepal Rastra Bank (NRB) has sought suggestions from stakeholders regarding the proposed rules by the end of January.
Financial institutions — commercial banks, development banks and finance companies — will not be able to charge any additional fee from depositors while opening or closing a bank account, according to the proposed draft. Likewise, they have to provide services such as any branch banking, certifying the bank balance statements, and activating an inactive account, free of cost.
Moreover, banks can impose renewal charges on the cards provided to customers only when the validity of the card expires and a new card has to be issued. However, for any liable additional charge, the financial institution has to inform the depositor beforehand.
Furthermore, banks will also have to inform customers in writing regarding the details of different types of accounts, fees or charges, process of banking and account closure, method of interest rate calculation, actions to be taken against borrowers who fail to repay loans, process and fees on advance repayment of loans, late fee, fines and penalties, policies regarding electronic cards usage, and laws and penalties regarding any banking offence.
In addition, the draft also states that borrowers who want to pay back loans in advance can do so without any advance payment fee. Even if the bank charges the fee, it needs to make a clear policy regarding the matter. Banks will also not be able to charge borrowers more than their own expenses for services sought with third entities such as Credit Information Bureau, valuators and insurance companies.
NRB is attempting to make banking more consumer friendly to rope in a wider involvement of the public in formal banking. According to NRB statistics, there are 11.6 million bank accounts in 209 financial institutions, as of mid-October 2013. Even if one person is considered to have a single bank account then too 41 per cent of the population has a bank account. The difficulty in opening a bank account and maintaining it is cited by the public for the low rate of financial inclusion in Nepal.
However, pinching on service fees will dampen the profit of financial institutions. In the first quarter of the current fiscal year, the income of commercial banks from fees, commission and discount stood at Rs 1.4 billion — 35 per cent of the profit.
Back in January 2011, NRB had directed financial institutions to publish their interest rate structure every three months. It had also instructed financial institutions to determine deposit interest rates in such a way that there would not be a difference exceeding two percentage points among the different deposit schemes of the institution. In December 2010, NRB had issued a directive stating that BFIs cannot reduce the balance from accounts as penalty for failing to maintain the minimum balance.
Source: THT
