A new directive from the Reserve Bank of India (RBI) is set to impact bank revenues while bringing relief to customers. Banks will no longer be allowed to charge customers for certain SMS alerts related to compliance, awareness, and promotional messages.

The move is expected to reduce fee income for major banks, while customers will benefit from not having to pay separately for these services.

No Charges for Certain SMS Alerts

In its directive issued on June 24, the RBI clarified that banks cannot levy charges on customers for SMS alerts sent for:

• Regulatory and compliance-related information
• Customer awareness messages
• Promotional communications

Earlier, many banks charged customers around ₹15–₹18 per quarter for SMS alert services to recover messaging costs.

SMS Alerts Not Mandatory for Small Transactions

The RBI has also relaxed SMS requirements for transactions of ₹500 or below. Banks are now allowed to use alternative digital channels instead of sending SMS alerts for such low-value transactions.

However, several major private banks, including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, may continue providing SMS notifications because they consider instant alerts useful for improving customer experience and preventing fraud.

Banks May Recover Costs Through Other Charges

Banking experts believe that while SMS charges will no longer be collected directly, some banks may look at other ways to balance the revenue impact.

Possible alternatives could include changes in:

• Account maintenance charges
• Minimum balance-related fees
• Other banking service charges

Industry estimates suggest that if a large bank has around 5 crore paying customers, removing SMS fees could reduce annual income by hundreds of crores.

Telecom Companies Could Also Feel the Impact

The RBI’s decision may also affect telecom companies that earn revenue from commercial SMS traffic.

India handles billions of commercial SMS messages every month, including many related to banking transactions. If banks reduce SMS usage for smaller transactions, telecom operators may see a decline in messaging volumes.

Digital Alerts May Become More Common

The RBI has allowed banks to use digital alternatives such as:

• Mobile push notifications
• In-app alerts
• WhatsApp messages
• Google RCS

With these options becoming more popular, banks may gradually shift from traditional SMS-based communication to digital platforms.

The new rule aims to reduce unnecessary customer charges while encouraging banks to adopt more cost-effective and modern communication methods.