It has been registered that about twenty-two scheduled commercial banks (SCB) have collected almost Rs 10,000 crore in the last three years as a penalty for not maintaining a minimum balance in regular saving bank accounts.
Speaking of Penalties
So yes, it is a hefty amount, Rs 10,000 crore and deposition of this amount on the basis of penalties for not maintaining your minimum balance in regular saving bank accounts, seems like you need to be more careful with your money.
The 18 PSBs, including SBI, Bank of Baroda and Punjab National Bank have collected about Rs 6,155 crore in the last three years, while the 4 major private banks, such as ICICI Bank and HDFC Bank have recorded a collection of Rs 3,567 crore in the same duration.
In fact, the collection came down for public sector banks in 2018-19 from 2017-18, while it went up in the case of private sector banks.
SBI Has Lowered the Threshold of Minimum Balance
SBI had been charging this penalty on maintaining a monthly average balance requirement till 2012 but discontinued doing so till March 31, 2016, while other lenders, including private sector banks, continued charging as approved by their board.
It was reintroduced by SBI with effect from 1.4.2017. This time, SBI lowered the minimum average monthly balance for savings accounts in metros to Rs 3,000 from Rs 5,000 and lowered the penalties for non-adherence by 20% to 50%.
According to RBI’s “Customer Service in Banks”’ Circular, it has authorized banks to charge their services but also to keep in check their reasonability and not out of line with the average cost of providing the services.
How Much Monthly Balance Should You have to Avoid Penalties?
Regular saving bank account holders are required to maintain an average minimum balance. Banks keep different minimum balance requirement for the savings account opened in different parts of the country.
The monthly average balance (MAB) is calculated by adding the closing-day balance of all the days and further dividing it by the total number of days.
- In metro & urban areas, maintain an average monthly balance of Rs 3,000.
- In semi-urban areas, a minimum of Rs 2,000.
- In rural areas, Rs 1000.
For HDFC (private bank)
- A minimum of Rs 10,000 in metro and urban areas
- Rs 5,000 minimum, in semi-urban areas
- An average quarterly balance of Rs 2,500 must be maintained in rural areas.
For ICICI (private bank)
- Average minimum balance in metro and urban areas is Rs 10,000
- Rs 5,000 in semi-urban areas
- Rs 2,000 in rural locations
- Rs 1,000 in gramin locations.
If this minimum balance isn’t maintained, SBI charges between Rs5 and Rs15 (plus GST). HDFC charges between Rs150 and Rs600 (plus GST) in urban and semi-urban areas and from ?270 to ?450 (plus GST) in rural areas.
ICICI charges Rs100 plus 5% of the shortfall in the required MAB. It charges 5% of the shortfall of this MAB in gramin locations.
Exemptions on Certain Accounts
Banks do not charge Basic Savings Bank Deposit accounts (BSBD) and Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts for non-maintenance of minimum balance. Apart from these two accounts, banks have their own list of such exemptions.
For example, SBI has 10 such categories, including Jan Dhan accounts, no-frills accounts, salary accounts, Phela Kadam & Pheli Udaan accounts, and accounts of all categories of pensioners.