Defending decision to levy charge for failing to maintain average balance, State Bank of India most saving bank accounts already have amounts above threshold and move is aimed to partly cover costs incurred on managing customer accounts.
"Among all the banks, SBI has the lowest minimum balance requirement. All the banks have the minimum balance requirement for accounts. We were the only one to withdraw it in 2012", SBI chairman Arundhati Bhattacharya told reporters on sidelines of event organised by India SME Forum.
The country's largest bank will not slap penalty (for non-maintenance of minimum balance) for accounts opened under Prime Minister's Jandahn Yojana. The move was not driven by motive to stem outflow of money from savings deposits after restriction on withdrawal is lifted.
Bank has to bear burden (costs of operation and systems) 110 million financial inclusion or JanDhan accounts. To manage such a large number of JanDhan accounts, bank needs some charges, SBI chief said.
Asked about plea from government to reconsider decision on fine, SBI managing director Rajnish Kumar said "there is no formal communication. We will see if something comes".
From the beginning of the next financial year (April 1), failing to maintain a monthly average balance (MAB) in your State Bank of India (SBI) savings accounts will attract a charge. SBI had suspended this charge in July 2012 to expand its customer base and generate low-cost deposits, as those in savings account earn interest rate of only 4 per cent.
The charge will be calculated based on the gap between the MAB and the actual balance in the accounts. MAB for those with accounts at branches in metropolitan areas would be Rs 5,000. If the difference between the MAB and the actual amount in the account is 50 per cent or Rs 2,500, SBI will slap a charge of Rs 50.
If the difference is between 50 and 75 per cent, SBI will charge Rs 75, and till 100 per cent, it will charge Rs 100. For rural areas, MAB is lower - Rs 1,000. The penalty for not maintaining MAB is also much lower in rural areas.
"We have considered many factors and have taken this step after carefully analysing them. We have found that most of the account holders maintain more than Rs 5,000 on a monthly basis and so they do not have to worry about any penalty", Bhattacharya said.
SBI's peers in public sector banking space are already levying fine. Punjab National Bank (PNB), Bank of Baroda (BoB), Bank of India (BoI) and Canara Bank already charge their customers a levy for failing to maintain a minimum balance for a quarter or a month.
Rural customers of Delhi-based PNB need to maintain a quarterly average balance (QAB) of at least Rs 500. For those in semi-urban, urban and metropolitan areas, the QAB is Rs 1,000. Charges for not maintaining the minimum QAB varies between Rs 15 and Rs 20, depending on the location and deficit in the accounts, according to the bank's website. BoB and BoI, both Mumbai-based large lenders, also follow the practice of QAB.