Minimum balance: public sector and private Banks in India penalised customers ₹11,500 cr in last four year

In the last four years, 24 State-owned and privately-run banks have collected over ₹11,500 crore from their customers for not maintaining a minimum balance in their accounts.

According to information provided by the Finance Ministry in the Lok Sabha on Friday, State Bank of India alone collected over ₹2,400 crore in the last fiscal (2017-18), while among the three private banks, HDFC Bank had the highest share (₹590 crore).

Interestingly, the penal sums collected by three large PSBs in 2017-18 was around 40 per cent of the total charged by 21 public sector banks. SBI had re-introduced charges after a gap of four years from April 1, 2017.

The Reserve Bank of India’s Master Circular on ‘Customer Services in Banks’, dated July 1, 2015, provides that banks are permitted to fix services charges on various services rendered by them. These charges should be in accordance with the policy approved by the bank boards, and “not out of line with the average cost of providing these services”.

Accordingly, various banks levy charges on not maintaining minimum account balance. These charges are collected primarily to recover a part of the cost incurred on servicing the accounts.

For example, SBI charges between ₹ 5 and ₹15 (plus GST) for various levels of shortfall. Its customers are required to maintain an average monthly balance of ₹3,000 for savings bank accounts in metro and urban areas, ₹2,000 in semi-urban and ₹1,000 in rural areas.

Similarly, HDFC Bank customers are required to maintain an average monthly balance of ₹10,000 in metro and urban areas, and ₹ 5,000 in semi-urban areas, while those in rural areas are required to maintain average quarterly balance of ₹ 2,500. Penal charges are between ₹150 and ₹600 (plus GST) in metro/urban and semi-urban areas, while it is between ₹270 and ₹450 (plus GST) in rural areas.

Basic savings bank accounts, including those under the Pradhan Mantri Jan Dhan Yojana are exempt from the minimum balance requirements.

Banks are also free to exempt any category of accounts from maintaining a minimum balance. The SBI, for instance, has 10 such categories, that include Jan Dhan accounts, No-frills accounts, salary accounts, Phela Kadam & Pheli Udaan accounts, and accounts of all categories of pensioners.

In the event of a default in maintaining a minimum balance/average minimum balance, the bank should notify the customer by SMS/ email/ letter etc, that penal charges would be applicable. If the customer replenishes the account within a month, the charges would be waived.