Facing Backlash, SBI Cuts Minimum Balance Penalty Charges

  • Facing Backlash, SBI Cuts Minimum Balance Penalty Charges

Facing Backlash, SBI Cuts Minimum Balance Penalty Charges

‎The bank had faced a lot of flak after it came to light that it earned more from minimum balance penalties than its profits (which were contained because of bad loan provisions).

Tuesday reduced charges for non-maintenance of average minimum balance (AMB) in savings accounts by up to 75 per cent.

SBI collected Rs1,771.67 crore from customers on account of non-maintenance of AMB between April and November 2017, according to the finance ministry's answer in Lok Sabha on 29 December.

The charges for non-maintenance of AMB for customers in metro and urban centers have been reduced from a maximum of Rs. 50 to Rs.15 per month, excluding Goods and Services Tax (GST). For Semi-Urban and Rural centres the charges have been reduced from Rs 40 per month plus GST to Rs 12 per month and Rs 10 per month plus GST respectively, a TOI report said.

‎"We have reduced these charges taking into account the feedback and sentiments of our customers". The minimum balance for SBI savings accounts are Rs 3,000 for accounts in the Urban and Metro areas.

Jan Dhan accounts, basic savings bank deposits, pensioners, social welfare beneficiaries and minors' accounts are exempt from AMB requirements.

In October previous year, SBI had slashed service charges on not maintaining monthly average balance by a whopping 20-50%. SBI earned Rs 1,771 crore in 8 months by charging people for non-maintenance of AMB, while their July-September quarter net profit was Rs 1,581.55 crore. On the other hand, if we talk about rural areas, you have to maintain a balance of 1000 rupees in your account as a minimum balance. SBI had brought back this requirement for its savings accounts in April 2017, after a gap of 6 years.

In this case, the SBI Bank has replaced the penalty again. Currently, the charges are in the range of Rs20-40. The bank had subsequently lowered the AMB, following criticism from the customers.

SBI claims the reduction is expected to benefit 250 million customers. "But it can't work this way that everything comes free", Kumar said.