The Reserve Bank of India (RBI) has asked banks to lower fees on several consumer products, according to reports. The move could reduce billions of rupees in revenue that banks currently earn from service charges.Bloomberg reported, citing people familiar with the matter, that RBI officials recently spoke to lenders about reducing charges on debit cards, penalties for not maintaining minimum balances, and late-payment fees. The central bank has not issued any official statement.
The directive comes as banks expand retail lending, including personal loans, car financing, and small-business credit. While retail growth has boosted bank profits, it has also attracted regulatory attention.Sources indicated that RBI is particularly concerned about charges that impact low-income customers. Currently, processing fees on retail and small-business loans range from 0.5 percent to 2.5 percent. Some lenders cap home loan fees at ₹25,000, or about USD 285.
Fee income has already been recovering. In the June quarter, it rose 12 percent year-on-year to ₹510.6 billion, compared with 6 percent growth in the previous quarter. The Indian Banks Association is now reviewing over 100 retail products as regulators examine large variations in charges across institutions.
