look news india
A new and tough decision of the Reserve Bank of India (RBI) is going to give a big financial blow to the big banks of the country. According to senior officials of the banking sector, due to ban on charging SMS Charges on some special SMS alerts sent to customers, there can be a huge reduction in the annual fee income of big banks by about Rs 300 crore. However, this move of the Central Bank will provide great relief to crores of bank customers of the country, because now they will not have to pay any extra for it from their pocket.
SMS for compliance, awareness and promotion of rules are now free
According to the official instructions issued by RBI, banks can no longer charge any kind of charge from customers for SMS alerts related to compliance, financial awareness and promotional. Till now, most of the government and private banks of the country used to secretly deduct SMS charges of Rs 15 to 18 from the customers’ accounts every quarter in the name of reducing the cost of these routine messages, which has now been completely stopped.
It is no longer necessary to send SMS on small transactions up to ₹500
The Reserve Bank has also given a big relaxation to banks to reduce operating costs. Under the new rule, sending SMS alerts to customers on small value transactions of Rs 500 or less will no longer be legally mandatory. If banks wish, they can give information about these small transactions through other digital means instead of SMS to save costs.
However, keeping in mind the security of customers and better banking experience, big private banks like HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank can continue this facility as before. These banks believe that real-time SMS alerts significantly reduce the possibility of banking fraud.
A bank is estimated to lose up to ₹360 crore annually
Experts say that after this ban, banks will not be able to recover the entire cost of sending SMS directly from the customers’ pockets. According to estimates, if a big bank has about 5 crore active and fee-paying customers, then due to the stoppage of SMS charges, that bank alone will have to suffer a loss of net income of about Rs 360 crore annually. To compensate for this loss, banks may slightly increase account maintenance charges (AMC), minimum balance penalty or other hidden charges in the coming days.
The mathematics of telecom companies will also get spoiled; WhatsApp and Google RCS will become options
The heat of this decision of RBI is going to reach the telecom sector (telecom companies) also. India currently sends approximately 60 to 80 billion commercial (A2P) SMS every month, a large portion of which are small value transactions at banks. If banks stop or reduce SMS sending on transactions up to Rs 500, there will be a huge decline in the SMS business revenue of telecom companies.
As an alternative, the Central Bank has given banks Google RCS (Rich Communication Services), WhatsApp Businesshas given the green light to use modern and affordable digital alternatives like in-app alerts and mobile push notifications as official mediums.