SBI looks at revising downwards minimum balance amount, penalty

Andrew Cummings
January 5, 2018

The State Bank of India (SBI) is pondering over slashing the minimum balance requirement on savings accounts which is now set at Rs 3,000 in urban centers, Rs 2,000 in semi-urban centers and Rs 1,000 in rural areas.

The bank collected Rs1,771.67 crore from customers on account of non-maintenance of minimum average balance between April and November 2017, according to finance ministry's answer in Lok Sabha on 29 December. Later, as it received flak from customers, it reduced the charges with effect from October 1. Customers fail to maintain the required minimum balance will have to bear a penalty which leads to deduct a specific amount up to Rs. 100 plus service tax from the customer's account.

SBI had reintroduced monthly average charges from April 1, 2017, but had to revised downwards the penalties for non-maintenance of the minimum balance from October 1, after facing backlash from customers.

Pensioners' accounts, Social Welfare Benefits accounts, and Basic Savings Bank Accounts are exempted from the minimum balance criteria. "We brought it back in April and we reviewed it in October; now also we are in the process of reviewing it". However, it is lower than large private sector banks.

Minimum balance in metro areas: Rs3,000. However, SBI has defended the charges and has said that the profits generated from the fines were paltry. In urban, semi-urban and rural areas, it is Rs 3,000, Rs 2,000 and Rs 1,000, respectively.

This all took place in June 2016 when SBI had increased the minimum required balance to Rs. 5000 to recover their all financial losses. For rural areas, the penalty ranges from Rs 20-50 plus service tax. If the shortfall is 50 per cent or less, then the bank charges Rs 50 plus service tax. It is also reported in the ET report that instead of charging for non-maintenance of monthly minimum balance, the bank was planning to bring in a totally different mechanism - a quarterly minimum balance rule. Accordingly, the bank demands Rs 5,000 in MAB in metros and Rs 1,000 in rural accounts, failing which it charges a penalty.

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