Ever-increasing number of banking fees

There has been widespread anger among the public in recent years over the numerous service charges imposed by Chinese banks, but so far the banks have turned a blind eye to these concerns. And their arrogant disregard for the public still lingers even after a government rule was introduced that abolished some of the charges.

On March 9, a new rule was jointly issued by the central bank, the China Banking Regulatory Commission and the National Development and Reform Commission (NDRC), abolishing 34 bank charges. Many perceived the rule - which took effect on July 1- as a move to appease consumers before the World Consumer Rights Day on March 15, as it had little impact on banks' profits and little benefit to individual consumers.

The 34 banking fees, which included those for opening and closing accounts, resetting passwords, and management fees for handling salaries, pensions and housing funds, were just a small proportion of the 850 fees charged by banks.

No wonder people were dissatisfied and they began to question why there should be a nearly 4-month period before the charges were stopped, when every time banks impose new charges or raise their fees the changes take effect immediately.

Even after July 1, some banks kept charging some of the fees that had been abolished. For example, Industrial Bank, Citic Bank and the Postal Savings Bank of China kept charging their clients for services including the resetting of account passwords, until July 13. As a result, Industrial Bank and Citic Bank were fined 2 million yuan, and the Postal Savings Bank of China was fined 1.8 million yuan by the NDRC.

In fact the regulation offered little benefit to many customers as a number of the 34 abolished fees, such as management fees for handling salaries, pensions and housing funds and account balance inquiry fees, had already been abolished by many banks before the rule was introduced, and it ignored the charges that customers complained about the most, such as small account management fees and the high charges for inter-bank funds transfer.

Meanwhile, the number of fees charged by banks has been soaring in recent years, from some 300 in 2003 to 850 last year, according to statistics from the China Banking Association (CBA). In the opinion-soliciting draft of Measures Governing the Service Prices of Commercial Banks, more than 3,000 charges are listed.

Yang Zaiping, deputy head of CBA, said that these charges are reasonable, legal, and offer customers excellent financial services, and they will also assist Chinese banks' strategic transformation.

While they may be reasonable to the banks, many of the charges were set unilaterally by banks based on the Interim Measures Governing the Service Prices of Commercial Banks issued in 2003. But according to the Law on Commercial Banks, the charge items and standards should be formulated by the banking regulatory organ of the State Council, the People's Bank of China, or jointly with the departments in charge of prices under the State Council. The price setting by banks obviously excludes state authorities.

So to push forward banks' market-oriented reform, the government must reinforce its supervision of banks' operations and services, to ensure relevant laws and regulations are duly followed. In addition, a sound public-hearing system should be established for banking fees.

Without client participation, these charges will never be reasonable and banks will not be fully market oriented.

The author is a writer with China Daily.

(China Daily 09/06/2011 page8)