Big Brother Govt decrees fuel surcharge to be borne by banks or oil cos; consumers, dealers heave in relief
The Union government on Monday announced that consumers buying fuel by credit or debit cards or petrol pump owners selling the fuel will not be charged a banking surcharge. The government said oil companies or banks will now bear the surcharge.
This comes after the All India Petroleum Dealers Association (AIPDA) announced that they will not accept payments from Sunday midnight. However, last minute truce happened when AIPDA was informed by the oil marketing companies that the transaction fee charges have been deferred till January 13, 2017.
The government had waived the Merchant Discount Rate (MDR) on fuel purchase post demonetisation for consumers to promote cashless economy. But after the expiry of the 50-day window, the banks decided to levy MDR on petrol pump owners, making petrol pumps bear 1 per cent on all credit card transactions and between 0.25 per cent and 1 per cent on all debit card transactions from January 9.
The surcharge would have meant a big blow to the demonetisation plan unveiled by Prime Minister Narendra Modi on November 8. Card payments had gained massive traction after the demonetisation of Rs 500 and Rs 1000 notes. But given this, the decision to charge the MDR was allowed by the RBI and may impact banks which will have to suffer the surcharge.
While this has not been announced yet, it is pretty certain that the banks will pass on the fuel surcharge impact on the consumer by a new charge or add to its levy of service charges for people maintaining less than the required account balance.
This is also a return of the Big Brother in government which had seen more business-friendly moves since 1991. The less interference shown b the government have been key in attracting foreign institutional and direct investment. The government decision to punish banks is without reason and usually ends up being collected from the consumer.