If you do not maintain a minimum balance in your regular savings bank account, chances are your bank penalises you for non-maintenance of the average monthly balance.
In 2017-18, public sector banks and leading private sector banks together collected close to ₹5,000 crore (₹4,989.55 crore) from customers who did not maintain minimum balance in their accounts, according to the numbers presented by the government in Lok Sabha last month in response to a question on charges levied by banks on customers.
The Reserve Bank of India (RBI) allows banks to fix reasonable charges on services provided. However, there are a set of accounts that cannot be charged with a penalty for non-maintenance of minimum balance. The Jan Dhan Yojana accounts and basic savings bank deposit accounts, also called no-frills accounts, are exempt from minimum balance requirements. Many banks also exempt salary accounts from maintaining a minimum balance.
How is average monthly balance calculated?
Different banks have different minimum balance requirements and penalties. Let’s take the example of State Bank of India, the largest bank in the country. In metro cities, the minimum balance you need to maintain in your SBI account is ₹3,000; it is ₹2,000 in semi-urban branches; and ₹1,000 in rural branches. The amount of penalty is decided on the amount that falls short of the minimum balance requirement for the particular category of account.
Average minimum balance is calculated by taking into account the balance maintained in an account on all the days of the month. Let’s take an account in a metro city in a 31-day month in SBI. If it had ₹5,000 for 10 days, ₹3,000 for 10 days, and ₹2,000 for 11 days; the average monthly balance would be: [(5,000x10)+(3,000x10)+(2,000x11)]/31 = ₹3,290. So, no penalty would be imposed in this case.
If the balance in the last 11 days was ₹1,000, the average minimum balance would have been ₹2,935 and ₹10 (plus taxes) would be charged for that month, as the shortfall was less than 50% of the balance requirement. If the shortfall is between 50% and 75% of the average minimum balance needed, the charge would be ₹12 and if the shortfall is over 75%, it is ₹15.
The charges are between ₹7.5 and ₹15 for semi-urban branches and ₹5-10 for rural branches. SBI had brought back this requirement for its savings accounts in April 2017, after a gap of six years.
Many banks, including SBI and ICICI Bank also let you check your average monthly balance through their Netbanking interface.