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RBI Halts Bank SMS Charges, Customers Cheer
8 Jul
Summary
- Banks may lose up to Rs 300 crore annually from halted SMS alert fees.
- RBI barred banks from charging for compliance, awareness, or promotional SMS.
- Optional alerts for low-value transactions could save banks millions.
As of July 8, 2026, banks face significant changes following a Reserve Bank of India directive on June 24. Banks are now prohibited from charging customers for SMS alerts concerning compliance, awareness, or promotional messages. This policy shift is projected to result in a loss of fee income, potentially reaching Rs 300 crore for major financial institutions.
Furthermore, banks have been granted discretion to discontinue mandatory SMS alerts for low-value transactions. However, prominent private banks like HDFC Bank and ICICI Bank are anticipated to maintain these alerts to uphold their reputation for technological advancement and superior customer service.
In a bid to reduce the messaging burden, the RBI has also made SMS alerts for transactions of Rs 500 or below optional rather than mandatory. This relaxation is expected to significantly cut down on the high volume of micro-transactions, potentially impacting telecom operators by reducing commercial SMS traffic by up to 20%.
Banks may absorb the cost of communications through indirect routes, such as incorporating them into account maintenance or other transaction fees. Alternative channels like push notifications, in-app alerts, Google RCS, and WhatsApp are now recognized for alerts below Rs 500, introducing competition for traditional SMS services.
