Indian Regulators SEBI, IRDA and RBI have been very active in recent times.They have come out with some landmark regulations only for the benefit of consumer at large. Banking too has seen spat of changes by RBI to make it more customer centric. With rising complaints and misselling among banks, there has been a high distrust on banking services from its customers. All these new changes augment well for banking customers especially the middle class families. Some of these will be available for you to benefit immediately while some will help in the long term.
Here are four ruling by RBI which will help you financially or personally –
1. No Prepayment/Foreclosure Charges on Floating Loans
This was a major change which RBI brought to the consumer table. Many of us were healing in the heat of high debt due to the frequent increase in interest rates. The prepayment/foreclosure charges of 2-4% was giving a double blow. Banks made it difficult to switch our loans as we end up paying these hefty charges while doing so. This created a big difference among new and existing borrowers. The new borrowers were being offered a lower rates while the existing borrowers have to pay these charges to avail the benefit. RBI bridged the gap by eliminating prepayment and foreclosures charges completely. As per its ruling banks are no longer permitted to levy a prepayment/foreclosure charge on floating rate loans. The floating rate loans comprises of housing loans, corporate loans, vehicle and personal loans. This is a major relief for borrowers as many wish to curtail their debt by switching their loans or prepaying them but deferred the decision to do so in the past.
2. No Penalty On Inoperative Accounts
There can be many reasons when your bank account becomes inoperative. Sometimes change in employment, location, financial problems leads you to not maintaining your savings bank account for a good period. In such instance your account becomes dormant where you are not able to maintain the minimum balance which is the respective bank savings account criteria. Banks were levying charges for non-maintenance of minimum balance on these accounts. RBI has now debarred banks from levying any charges on non-maintenance of balance in dormant accounts. Instead the regulator has recommended that services avaivable in these these accounts can be restricted. So if your account is inoperative you will not be charged for non-maintenance of minimum balance but you might be allowed only few ATM transactions free or you might be restricted for cheque books etc. This is a welcome move as you are not penalized financially.
3. Bank Accounts for Age 10 and Above
This is the most fascinating decision by the banking regulator. Children with age 10 and above have been allowed to operate bank accounts. So your 11 year old child will now be able to withdraw cash from his savings account through ATM. For parents this can be a good move for imparting the banking knowledge early in life and make their child financially literate. Instead of giving them pocket money parents can now deposit in their savings account and let the child withdraw according to his/her need. It is also a good move for teaching your kids about using money. However, parents will have to be careful here. Since the transactions and utilization of money is in child control, any wrongdoing can spoil their future. You still need to monitor your child accounts so that you are very well aware what your child is doing with the money you have given.
4. ATMs To Be Made Friendly for Disabled
Disabled have always face problems due to lack of proper infrastructure. RBI showing the concern have come out with a ruling for banks to make their ATMs disable friendly. For this banks have to provide ramps and Braille keypads ( for blind and visually impaired) at least in 1/3rd of their ATMs so that Disabled can access the services at ease. The ruling also states that banks need to enabled ATMs with voice command for further ease of use. The bank ruling has extended the benefit by asking banks to provide ramps at the entrance of the branches so that person with disabilities/wheel chair users can enter bank branches with ease. Not only this banks have to provide magnifying glasses in their branches to help customers with low vision. The regulator has gone to the extent of monitoring the implementation of this ruling by seeking a periodic report.
There have been certain other rulings by RBI such as banning 0% interest rate schemes, reducing cost on NEFT transactions below Rs 10000, on ATM withdrawals at non-bank ATMs and on undue cost charged by banks for SMSs, which benefit customers at large although some may reduce access to services you are already availing. The rulings for NRIs in the past to open bank accounts jointly with resident relative was a welcome move. RBI set up a committee in 2011 for reviewing customer services in banks which has put forth its recommendations to the regulator to overhaul banking services. So you can expect more actions from RBI in the future.
Do you feel good about the changes being implemented by the regulator?
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