As we know that the State Bank of India made a decision to waive penalties for minimum balance requirements.
Interstibly, the other public sector banks have seen a significant increase of over 35% in collections under this head over the past five years.
Banks Earning Huge With Minimum Balance Panelites
Not only that, it appears that these banks collected around Rs 8,500 crore in penalties over the past five years starting from FY20, as per the data presented as part of a written response to an unstarred question in the Lok Sabha, revealed in a media report.
In a closer look, the 11 public sector banks have varying mechanisms for collecting penalties.
For instance, Punjab National Bank, Bank of Baroda, Bank of India, Punjab & Sind Bank, Union Bank of India Bank and UCO Bank levying charges for not maintaining a minimum Quarterly Average Balance (QAB).
Other players including Indian Bank, Canara Bank, Bank of Maharashtra and Central Bank of India levying penalty for not maintaining an Average Monthly Balance (AMB).
The amount of these penalties range from Rs 25 to Rs 600, further depending on the bank and the customer’s location.
Need Of Transparency In These Practices
Considering these facts, the Minister of State for Finance, Pankaj Chaudhary has emphasized the importance of transparency in these practices.
He also emphasized that the banks must inform their customers of the minimum balance requirements at the time of opening an account.
The banks should also notify them in case they are making any changes in this regard.
In case, the account fails the minimum balance requirement then the banks should alert customers to the penal charges, applicable.
If the customer does not rectify this within one month, then the bank should ensure that savings accounts do not turn into negative balances solely due to these charges, Chaudhary underlined.
Further adding, “It should be ensured that savings accounts do not turn into negative balances solely on account of levy of charges for non-maintenance of minimum balance,” while talking to a media platform.
