You deposit money in the bank and in return you get interested. Then how do banks make a profit in their business?
In today’s era, almost everyone has at least one bank account available. Bank accounts are very important for us because our money is safe there. We deposit our money and the bank gives it back with interest. This means that we get more money than what we have given, but have you ever tried to think that when banks give us more money than how do they earn? Along with this, from the salary of the bank employees to their facilities, how do they provide?
Now you will say that banks earn their profit by giving loans to people from their interest money, but is this enough? You may not have any idea about this, but there are many other ways of earning from banks. So let us give you some information about the process of banks today.
SMS Charge-
How many SMS do you get from your bank? Do you know that for these SMS also the bank charges its customers quarterly? RBI’s guideline says that banks should provide this service free of cost, but there are many banks that charge 5 paise per SMS up to Rs 25 per month (GST separately) from customers’ bank accounts. The SMS charge of Axis Bank is also the same.
Debit/ATM Card Charges –
You must be aware that if you withdraw money from a non-bank ATM more than 3 times, then the bank levies a separate charge for that too, the bank can charge you 25 rupees (GST apart) per transaction. Not only this, but there is also a maintenance charge of the card, in which an amount of up to Rs 100-500 is deducted from your account once in a year. If you have to make any kind of new card, then you have to pay for that too.
E-Commerce Banking Charges-
These are most in vogue nowadays and e-commerce charges are levied by the banks. These charges are charged per transaction ranging from Rs 20 to Rs 100. These are not just limited to e-commerce websites, but banks also levy charges during various services like booking tickets through IRCTC, using payment apps, UPI payments, etc.
Fund Transfer Charge-
Different transaction limits have been set for services like NEFT, RTGS, IMPS. One-time transfer of money can take from Rs 5 to Rs 50 in IMPS. This will be the fee for only one transaction i.e. if you do 5 transactions in a month then 250 plus GST may be charged. Similar charges are also levied in RTGS, NEFT. NEFT chart charges only 25 paise for transactions below 10000.
Transaction Charge-
Now you must be feeling that banks take charge of withdrawing money from ATMs and transfer money and e-commerce, what other transaction charges are there with it, then let me tell you that this card is also charged for swiping.
There is an extra 2% charge if you swipe the credit card.
Similarly, there is an extra charge for making payments by debit card.
If you go to deposit cash in your bank or if you go to withdraw cash from your bank, then it is also charged.
If your transaction limit is more than money can be deducted from your account every month.
This charge is taken from all the customers and retailers.
Interest on Loan-
Now the earning that can probably give the most profit. Banks give the money deposited by the customers to other customers in the form of loans. Apart from this, some of the deposit money is also invested by banks on shares and funds in the market, banks give loans not only to customers but also to many businesses and firms which have a huge amount. Banks also get a lot of interest in this.
PIN Reset and Card Decline-
Here it is not talking about resetting the PIN of net banking, but here it is talking about resetting the debit or credit card PIN. Many private banks like HDFC levy additional charges on customers for resetting their PIN. Similarly, if a cardholder has to close his debit or credit card completely, then he also gets a separate charge.
You must be thinking that how banks would work by charging Rs 25-30 from a customer, but in lieu of crores of such transactions every day, banks get crores of rupees and this is the reason why banks make a profit. By the way, you must have understood how banks manage their expenses.
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