Central Bank maintenance levy fuels customer fury

The move, aimed to boost its fee income, has triggered customer resentment.

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A dozen banks, including one private sector lender, were under PCA last year.
Mumbai: State-run Central Bank of India, which is waiting to be freed from the clutches of prompt corrective action, has levied a unique annual maintenance charge on select accounts with one-year retrospective effect.

The move, aimed to boost its fee income, has triggered customer resentment. An investor association has registered complaints with the bank and has written to the Reserve Bank of India highlighting the matter.

“While we have written to the RBI, we have also raised the matter to the bank,” said Narendra Mehta, president of Interact Foundation, a Mumbai-based investor association registered with the Securities and Exchange Board of India (Sebi).


“The bank has every right to levy the same for the latest financial year, though majority of PSU banks are not charging annual maintenance fees or folio charges. But, CBI has suddenly slapped it for the preceding financial year,” he said. An email query sent to the Central Bank of India remained unanswered till press time on Wednesday.

The bank has levied Rs 354 as annual maintenance fee for financial years 2018-19 and 2017-18 in February and March for customers who have current accounts and overdraft accounts with the Andheri East branch in Mumbai.

“The bank looks desperate to generate more fee income at any cost,” Mehta said.

The bank has Rs 14,702 crore in current account deposits running into hundreds of accounts, normally used for business purposes, according to data from the bank’s investor presentation updated to Dec 31, 2018.
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A dozen banks, including one private sector lender, were under PCA last year.

The RBI has recently lifted the cap on some lenders like Allahabad Bank. It is expected that CBI too will come out of the restrictions soon.

PCA is a regulatory measure that curbs the bank’s ability to lend, spend and mop up deposits. Once a lender attains certain financial parameters, the RBI lifts such curbs. A bank needs to pull up socks pursuing austerity measures, which will aid in income generation and economic use of capital.

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