Reserve Bank of India
RBI/2014-15/308
DBR.Dir.BC.No.47/13.03.00/2014-15
November 20, 2014
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/Madam
Levy of penal charges on non-maintenance of minimum balances in savings bank accounts
Please refer to our circular DBOD.Dir.BC.53/13.10.00/2002-03 dated December 26, 2002 on ‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers, in a transparent manner, regarding the requirement of minimum balance in savings bank account and levy of penal charges for non-maintenance of the same at the time of opening the account.
2. In this connection, a reference is invited to paragraph 30 of Part B of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection. One of the proposals contained therein was that banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. A reference is also invited to the recommendations of Damodaran Committee on customer service in banks which, inter-alia, recommended that ‘banks should inform the customer immediately on the balance in the account breaching minimum balance and the applicable penal charges for not maintaining the balance by SMS/Email/letter. Further, the penal charges levied should be in proportion to the shortfall observed’.
3. The policy announcement has been reviewed after extensive consultation with banks. Consequent to these deliberations and after taking into consideration the recommendation of Damodaran Committee, it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, banks shall adhere to the additional guidelines given in Annex. The guidelines come into effect from April 1, 2015.
4. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank’s website.
5. In the meantime, all banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs/emails etc) for effective implementation of the guidelines.
Yours faithfully
(Lily Vadera)
Chief General Manager
Annex
Levy of charges for non-maintenance of minimum balance in savings bank account shall be subject to the following additional guidelines:
(i) In the event of a default in maintenance of minimum balance/average minimum balance as agreed to between the bank and customer, the bank should notify the customer clearly by SMS/ email/ letter etc. that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable.
(ii) In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder.
(iii) The policy on penal charges to be so levied may be decided with the approval of Board of the bank.
(iv) The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized.
(v) It should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services.
(vi) It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance.
In order to show fat balance sheet every quarter, new trends equivalent to highway robbery is being resorted by banks, including the Public sector banks.
I had an experience. The Kerala Headquartered bank, S.B.T started recovering Rs. 29/- per quarter from Sept 2013. They used to debit Rs. 29/- for each quarter, even if NO transaction takes place. Many customers never check their statements of these debits nor update their pass books periodically. When complaint made to the HO, the amount was reversed.
Another case is that they even charged twice, the debit card yearly maintenance amount (Rs.112/-) On enquiry, the branch told that when the earlier card was reported lost, they issued a another card and hence the double debit. When they had acknowledged my application about the report of loss of card, they had issued a “replacement” card and charged Rs. 200/- as replacement fee for it. When I pointed out this, the amount was reversed.
Another is that they (SBT) charge Rs 29/- per quarter for sending sms, without considering whether sms was actually sent, No. of sms send etc which is against the circulars of RBI. Many banks (including pvt sector banks) does not charge for sms and others like SBI, PNB etc charge only Rs. 15/- per quarter. I believe, the Rs. 29/- per quarter is highest among PSBs.
It is high time the PSU banks should desist from charging poor customers, who are all unaware of these hidden charges.
sec 80 notices are getting ready on union of india, RBI on the issue of circular, to be replied by secretary unon finance ministry as also cabinet secretary, as also on RBI too.
people poor have a definite grievance that must be countenanced by government of india and other agencies too as they failed to protect common BPL man/old age very pensions receiving pensioners in india.
unless remedial measures forth coming in 3 weeks here of all these officers as public servants would get notices as o why constitutional action cannot be taken on all of them.regards
why minimum balance maintenance? when savings bank accounts are opened in those days minimum opening amount was kept at Rs.5/-; when that amount became native the account is maintained by banks for several months too why several years too.
what is great that we have to maintain some Rs.2500 or Es.5000 in account when that money is used by banks for call money for hours too and banks earn when so minimum balance need to be abolished as even to day some banks do not charge minimum balance maintenance debits when so it is absolutely clear some how force people maintain the minimum balances.
most savings banks accounts are opened by a lot of poor wage earners say those who earn less than even Rs.3000 per month. how do you mr Finance minister expect such poor people maintain minimum balance in savings banks accounts?
Do you mean to say such poor persons should borrow from some one just to maintain minimum balance in so called saving bank accounts.
your country minimum earning per day is not even Rs. 100/- per day. see under some yojanas below poverty people SO called BPL people account about 60-70 percent population in india that is real fact.
if so that so called minimum balance idea how tenable?
Better be honest to accept india is still poor economy,why do you play that you are a great developed economy.
services in a lot of places are given practically free of any charges in india, our parliamentarians need to better understand.
Fact is such poor men accounts would not go to banks at after all from here he can get so called minimum balance money, unless government itself provides such minimum balance money to such dwindling minimum balance in accounts under your so called every year finance bills and acts!
better be reasonable mr. finance minister. Else yu fall under Wednesbury principle the very governance after all constitution of india has fundamental rights under part iii which you should read several times.that also cannot be alterable too
Governance does not mean legislature can do anything it likes please?Even Oliver Cromwell said.. ‘in every government, there must be something fundamental , somewhat like Magna Carta which would be unalterable’ that way indian constitution has the fundamental rights which is a replica of Magna Carta.
In Leissez faire economy rich survive but in poor economies poor need to survive. Else some such problems like that happened during King John’s time in England.
Lord Coke observed in his reports through a dictum in Dr. Bonheim case…never England closely followed, it has seminal in our law…Coke asserted..
in many cases, the common law will controul the Acts of Parliament, and sometimes, adjudge them to be utterly Void; when Acts of parliament is against common right and reason or repugnant or impossible to be performed, the common law (here fundamental rights in part III in indian constitution) will controul it, and adjudge such Acts to be VOID’;
GOVERNANCE has some great legal history and eminent jurists worked over centuries that such things need to prevail else governance is some Wednesbury principle onlyis me clear opinion, whether any likes or not as i am advocating common man’s cause please. thanks