State Bank of India defends minimum balance charges

MUMBAI: The country's largest lender State Bank of India has defended its monthly average balance (MAB) charges and said the bank's profits on such accounts was paltry as compared to the services it offered free of cost. The bank also reiterated that no charge was levied on Jan Dhan accounts, pensioners and small savings account.

"On an average balance of Rs 3000 in metro, SBI earns Rs 6 only per month whereas for a minimum balance of Rs 1000 in rural, bank earns Rs. 2 per month, which is meagre when compared to the services offered and corresponding costs incurred by the bank (Free Cheque Book, 8 free ATM transactions, free branch transactions)," the bank said in a statement.

SBI defended its decision to reintroduce MAB, after finance ministry data showed that the state-run lender collected Rs 1,771 crore during April-November 2017 as charges from customers who did not maintain their minimum monthly average balance in their accounts. SBI restored MAB charges from April 2017, after a gap of 6 years and then revised it downwards in October after feedback from stakeholders.

The bank also reiterated that it had excluded Jan Dhan accounts, basic savings bank deposits (BSBD) accounts, pensioners, beneficiaries of social benefits from the government and accounts of minors from the MAB requirement. SBI has 40.5 crore savings bank account holders, of which 13 crore accounts under the PMJDY and BSBD are already exempted.

In October last year, SBI had slashed service charges on not maintaining monthly average balance by a whopping 20-50%. Earlier, metro and urban customers were charged Rs 40-Rs 100 rupees for not maintaining average balance. This penalty was brought down to Rs 30-50. The charges at semi-urban and rural centres were also revised to Rs 20-40 from Rs 25-75.