Banks should cut inter-region fees: BOT
Banks are facing a new challenge to their non-interest income - as the Bank of Thailand wants them to cancel inter-region transfer fees."I see no reason for commercial banks to charge the fee because a money transfer with the same bank might not incur extra costs," deputy governor Krirk Vanikkul said last week.
"The central bank considers the services involved with transactions, including those at counters, should be improved," he said.
The central bank is collecting data and is seeking a discussion |with banks on requiring payment service improvement particular-|ly for inter-region transfers, he |said. Only Tisco Bank and Kiatnakin Bank waive the inter-region fee, while others charge Bt10-Bt15.
Customers should not be made to pay the fee for inter-region transfers to the same bank because this cost is not high. A fee of Bt15 is regarded as too much.
The central bank is studying the service fees charged by local banks in the Asean region.
Banks currently allow customers to make one inter-region transfer for free then charge them for subsequent transfers.
Banks say they would wait to see the logic and cost formula used by the central bank. However, they are unlikely to agree with the regulator's reasoning because they have operating costs.
Kris Chantanotoke, executive vice president of Bank of Ayudhya, said the elimination of the inter-region transfer fee was discussed by the Thai Bankers' Association.
The calculation of inter-region transfer costs by banks and the central bank might be different, so the bank would follow the formula before making a decision.
Banks had many costs, he said. It was essential for them to charge fees. The cost of inter-region transfers in terms of IT was not high but there were operating costs especially to transport cash to the provinces.
Weidt Nuchaleran, senior executive vice president of Krungthai Bank, said banks had already cut some fees at the central bank's request, but the inter-region transfer fee needed to be charged even if the transaction was made from the same bank.
The bank had operating costs from performing inter-region transfers such as counting and transporting cash. If the central bank asked for a fee exemption, the bank would explain to it why the fee was needed.
"We will wait and see the information from the regulator. The competition in the banking industry has squeezed net interest margins, so banks have to find revenue from fee income," he said.
Pakorn Partanapat, executive vice president of Kasikornbank, said the bank would wait to hear the argument of the authorities, but banks have invested heavily in infrastructure to enhance the convenience of customers.