Question 12.13: What is lifeline banking? What pressures does it impose on t...

Lifeline banking consists of basic service packages offered by banks to customers not generally able to afford conventional bank service offerings. The essence of these services is that they carry low service fees and usually do not offer all of the features of banking services carrying full service fees. The pressure on managers to offer basic or lifeline services has aroused a big controversy. From a profit motive point of view banks should not offer unprofitable services. On the other hand, financial institutions are partially subsidized by government in the form of low-interest loans and deposit insurance and, therefore, have some public-service responsibilities which may include providing certain basic services to all potential customers, regardless of their income or social status.