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LATEST NEWS UPDATES | Vague RBI guidelines see banks cap PM's Jan Dhan Yojana accounts -Mayur Shetty

Vague RBI guidelines see banks cap PM's Jan Dhan Yojana accounts -Mayur Shetty

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published Published on Jul 4, 2017   modified Modified on Jul 4, 2017
-The Times of India

MUMBAI: Crores of Pradhan Mantri Jan Dhan Yojana (PMJDY) account-holders risk either having their accounts frozen or having charges imposed if they exceed four debit transactions in a month. Vague wording of the Reserve Bank of India's guidelines on basic savings bank deposit accounts (BSBDA), which include PMJDY accounts, has led to banks conjuring up ways to cap free transactions.

The norms applicable to PMJDY accounts are those that are prescribed for the BSBDA by the RBI. The BSBDA was earlier known as a 'no-frills' banking account— a service under which banks were to provide free basic banking facilities without any minimum balance requirement. Almost every bank today is violating the RBI's norms because of the unclear wording.

The frailties in the BSBDA have been highlighted in a report by Ashish Das, professor at the Indian Institute of Technology, Bombay.

The report shows how banks are freezing transactions, imposing minimum balance requirement or levying charges when a customer exceeds the prescribed four free withdrawals.

State Bank of India, which has more than 9.9 crore PMJDY accounts, has chosen to freeze all debits once the free transaction limit are exhausted. A bank official said that customers can do more transactions by converting their accounts into regular savings accounts. Axis Bank is informing customers how the account will turn into a regular savings account when the limits are breached. ICICI Bank had earlier imposed charges but subsequently refunded them. HDFC Bank has said that transactions beyond four are chargeable.

To complicate matters, instead of speaking about withdrawals or ATM withdrawals, the guidelines describe withdrawals as all debit transactions. This includes money going out of the account in any form; either by cash withdrawal at ATMs, at branches or through electronic fund transfers or debit card uses. The RBI definition of withdrawal is so wide, it also includes standing instructions for money going out towards EMI payments.

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The Times of India, 4 July, 2017, http://timesofindia.indiatimes.com/business/india-business/vague-rbi-guidelines-see-banks-cap-pms-jan-dhan-yojana-a/cs/articleshow/59432381.cms


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