According to the report by Reserve Bank of India (RBI), you are paying more than your expectation while choose to open a basic bank account.
In common scenario, a person who wish to open a bank account with any bank visits three times to open the account. First one becomes the inquiry when s/he ask and learn about how to open a bank account with the chosen bank. The Bank personnel are there to address such aspects. Later the person comes for submitting the required document along with the forms. The third visit to the bank occurs when then person get informed by the bank to collect their documents. This all cost Rs. 139, says the RBI Report. But it’s not just about the money, the total time spent in the entire process is around 7 hours and 28 minutes.
It Also include monetary and non-monetary transaction costs, the dealing with the banking staff who are not always willing to help and tend to people for a ride, especially when it comes to documentation.
With reference to an audit of banks in 2016, the RBI report says almost 2 hours are spent in collecting documents after the initial procedures are done. This costs up to Rs. 77. It takes around 20 minutes to fill few forms. The time spent while traveling is 3 hours 22 minutes.
According to this report, the total cost of transaction for the lower middle class or poor people is equal to the worth of the entire day work. This shocking fact can have a serious bearing on the government’s ambitious plan to include millions of poor people into banking.
Financial inclusion is the prime goal of government but the transactional cost that a poor person has to pay can discourage the poor from participating in the banking economy. Further the report says that the technological solutions can cut down the costs of basic banking. Once the JAM (Jan Dhan, Aadhaar and Mobile Phone) reaches down to the masses, it can help in bringing the banking costs down.
This post was originally written at The Economic Times