Nepal Rastra Bank (NRB) has barred banks and financial institutions (BFIs) from charging service fees for opening or closing accounts, providing any branch banking service and issuing bank statements. However, the central bank said that BFIs could charge their customers for taking bank statements more than once.
Issuing a directive on Friday, NRB has instructed A, B and C class BFIs not to charge a fee for reactivating inactive deposit accounts or deduct a penalty for not maintaining a minimum balance.
If BFIs decide to charge a fee for other services, they are required to inform their customers in advance. Similarly, the central bank has forbidden BFIs to charge any kind of fees for the use of electronic cards as long as they remain valid.
NRB’s directive entitled Provision on Financial Customer Protection and Financial Literacy, a draft of which was made public last January, has now been issued as a directive with a few revisions.
As per these instructions, BFIs are not permitted to charge any fees except administrative service fee and commitment charge besides the interest while providing loans.
“If BFIs charge any extra fee other than administrative service fee and commitment charge, that should be reflected in the interest rate itself,” the central bank said. As per the directive, there should not be a difference of more than 0.25 percent in the fees that BFIs charge their various borrowers.
Similarly, NRB has forbidden additional fees for services that BFIs provide to other institutions. For example, BFIs cannot charge more than what the Credit Information Bureau charges for providing information regarding the credit history of a potential borrower, black listing someone or removing someone from a black list.
Likewise, the central bank has told BFIs to mention clearly any fees for early repayment. The central bank has also said that the difference between interest rates on various types of savings accounts should not be more than 2 percent. If the interest rate on a particular type of savings account is changed, the interest rates on all other savings accounts should be revised. BFIs cannot offer different interest rates on similar savings accounts. They have to mention the penal interest that they charge when they sign loan agreements with their borrowers.
While charging penal interest, BFIs can charge such interest only for the delayed repayment period, according to the directive. BFIs have to pay interest on deposits in inactive bank accounts too.
While depositing money through cheque, bill or pay order, the entire amount should be deposited in the customer’s account. If BFIs charge fees for depositing money through such instruments, customers should be informed about them and they should be deducted from his or her account before a new deposit.
NRB has also told BFIs to create a special provision to provide banking services to the elderly and the disabled. They have been told to install disabled friendly counters. BFI’s have also been instructed to create a complaint hearing desk.
In order to maintain transparency in various fees and interest rates, the central bank has told BFIs to prepare a booklet containing information such as the various types of deposit accounts and their details, interest rates and fees and the basis of fixing them, working procedure regarding electronic payment and penalty and fines in banking transactions.