Banks Ordered to Refund Unauthorized Charges: SMS Fees, Minimum Balance Penalties

Indian banks — both public and private — have faced a wave of consumer complaints about hidden and unauthorized charges. The most common grievances include:

**Minimum balance penalties:** Banks impose steep penalties when savings accounts fall below a minimum balance threshold, even for accounts that were opened with zero-balance promises (especially Jan Dhan accounts). In many cases, the penalties consumed the entire balance and even pushed accounts into negative territory.

**SMS alert charges:** Banks unilaterally imposed quarterly SMS alert charges of Rs 15-20 per quarter without obtaining explicit consumer consent. While individual amounts are small, across millions of accounts, these charges generated enormous revenue.

**Account maintenance charges:** Banks imposed annual maintenance charges on accounts that were originally opened without such conditions, changing terms unilaterally.

**ATM charges:** Excessive charges for using other banks' ATMs, often beyond RBI's prescribed limits.

The RBI has intervened multiple times, directing banks to ensure transparent communication of charges and obtaining explicit consent before imposing new fees. However, compliance has been inconsistent.

Consumer courts have ordered banks to refund unauthorized charges in numerous cases, establishing that banks cannot unilaterally change terms and impose charges without informed consent.