Many Kotak Bank customers were greeted with a rather unpleasant text message on Friday, with the lender announcing a fee on SMS alerts.
According to Kotak Mahindra Bank, starting December 2025, a small fee of Rs 0.15 (15 paise) will be charged for each SMS alert sent for transactions on your savings or salary account, after the first 30 SMS alerts each month.
If you had two cutting chai at Rs 10 each a day in a 30-day month, and paid the vendor via UPI, the SMS alerts will alone cost you an extra Rs 9—just one rupee shy of another cup of hot piping tea.
The basic understanding from the lender's "public document" is that transactions like ATM withdrawals, UPI/NEFT/RTGS/IMPS transfers, cash deposits, and debit/credit card usage will trigger these SMS alerts.
However, if your account keeps a combined balance of Rs 10,000 or more (including monthly average, savings, and term deposits) or receives regular salary credits, these SMS alerts will remain free for you.
Some account types—like Private Banking, Kotak Easy Savings, Non Resident Accounts, and select institutional or government accounts—are excluded from these charges.
To put it simply, if you are someone who cannot afford to keep Rs 10,000 as average monthly balance (stated above), the lender will charge you more for something as basic and 'mandatory' as SMS alerts.
And it is not just one bank. All the major ones have SMS alert charges, and funnily enough, they also attract GST in some cases.
Mandatory charges?
Back in 2017, the Reserve Bank of India (RBI) said that customers had to be mandatorily registered for SMS alerts. "Banks must ask their customers to mandatorily register for SMS alerts and, wherever available, register for e-mail alerts, for electronic banking transactions. The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered," the apex bank stated in the notification dated July 6 2017, titled Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions.
Now, customers—especially those who have monetary limitations—are being forced to shell out money as extraneous charges for something that is 'mandatory' for banking. In an ideal world, these should be borne by the banks themselves as operating costs.
And what is with the waiver of charges on HNI accounts—the ones who won't even feel the pitch?
Last month, an ET report stated that banks in India approached the RBI to exempt them from sending SMS alerts for transactions under Rs 100. It almost sounds like these financial institutions are blaming the rise of low-value payments due to the advent of the UPI—the same system that gave them a huge bump in accounts with the Digital India initiative.
Yes, the Indian banking system now sees billions of transactions happening daily. But that is the cost of doing business. The one that goes between the topline and bottomline of the P&L statement as 'operating costs'.
And the lenders claim that the SMS waiver and the fees attached to these alerts are to reduce customers getting "overwhelmed" by them.
Some banks say that these SMS alerts can be opted out of, but a quick look at almost every one of their banking websites and apps will reveal that such options, if they exist, are buried deep down in the caverns of the sitemap.
Kotak’s response to SMS charges
"Kotak’s policy is among the most customer-friendly in the industry," the lender responded in a statement to THE WEEK, "It is the only bank offering a free monthly limit of 30 alerts."
Kotak Bank also stated that the waiver for SMS alert charges for its 811 accounts—widely marketed as zero balance accounts aimed at the youth—was that they have to maintain a Rs 5,000 AMB.
However, the regulator mandated "financial inclusion" BSBDA (Basic Savings Bank Deposit Accounts under PM Jan Dhan Yojana) carry no SMS alert charges, it said.
Kotak may have moved to the per SMS charging now, but other major lenders like ICICI Bank and HDFC Bank already have SMS alert charges in place.
HDFC Bank and ICICI Bank charges
HDFC Bank, for instance, charges you 20 paise + GST per SMS alert, according to their website. This is the highest among the three, if you consider the amount of transactions done daily. But they detail how to unsubscribe from them right there in the schedule of charges.
ICICI Bank states that it charges Rs 15 per quarter + 18 per cent GST, debited in the first month of the three-month period. However, these are for credit and debit transactions above Rs 5,000 through any channel, EOD balance alerts, and those that inform about balance above or below a threshold limit.
According to the ICICI Bank website, these SMS alerts are non-chargeable: Debit card transactions on POS/ATM, Internet Banking SMS like OTP, URN that are bank-induced, cheque return intimation alerts (inward and outward), salary credit alerts, account opening intimation, and SR CR creation/closure alerts.
Both banks also have account classes where the charges are waived off, too, like certain corporate accounts and salary accounts, much like Kotak.
It is not about a mere Rs 9 for a month. The charges of running a business come with the territory.
HDFC Bank, the market leader, posted a net profit of Rs 18,641 crore in the second quarter that ended in September 2025. ICICI Bank raked in Rs 12,359 crore in standalone profit after tax (PAT) in the September quarter.
Kotak Mahindra Bank alone made a profit after tax (PAT) of Rs 3,253 crore in the second quarter of fiscal FY 2025.
Punishing those who are not able to keep Rs 10,000 AMB with SMS charges may not be the right branding move these banks should be exploring, for now.