SBI may cut minimum balance requirement to Rs 1000 in urban areas

SBI may bring down minimum balance requirement amount for savings accounts

State Bank of India (SBI) on Friday said it is looking at revising minimum balance amount and penalty charges in the wake of all-round criticism for raking in a windfall profit of over Rs 1,771 crore from customers in penalty for non-maintenance of monthly average balances in their savings accounts.

It may be noted that that the SBI garnered through fines was more than lender's net profit of Rs 1,581.55 crore in July-September quarter and almost half of the Rs 3,586 crore profit in April-September period.

SBI was followed by Punjab National Bank which recorded the collection of Rs 97.34 crore during the April-November period.

The development comes after the finance ministry flagged off the issue of profits public sector banks made by charging penalty for non-maintenance of monthly minimum balance. According to the bank's revised charges, the charges are Rs 100 plus taxes. But soon SBI received a backlash from its customer because of their high minimum required balance due to which SBI brought down the limit to Rs. 3000 from Rs 5000. The new minimum balance rules became effective from October 1. If MAB falls between Rs 2,999 and Rs 1,500, then the account holder will have to pay Rs 30 as penalty. For rural areas, the penalty ranges from Rs 20-50 plus service tax.

The MAB for urban SBI customers remains unchanged, as does the penalty for its non-maintenance. From April 1, 2017, the bank had reintroduced the monthly average balance (MAB) charges after a gap of five years. This is same to those for metro city SBI customers. The MAB for accounts from metro areas was set at Rs5,000 and those from urban areas at Rs3,000.

The MAB for semi-urban areas has been unchanged at Rs 2,000, but penalties for non-maintenance have been slashed for this group.

SBI has also plans to change the requirement from monthly average balance to quarterly average balance. For MAB less than Rs 500, they will now have to pay Rs 40 instead of Rs 75.

SBI has close to 40.5 crore saving bank account customers.

The bank had said savings bank accounts such as Prime Minister's Jan Dhan Yojana, small accounts and basic savings bank deposit accounts, pensioners, minors and all social beneficiary accounts are exempted from MAB requirement and no charges ever have been recovered.