The country's largest lender State Bank of India is likely to slash the minimum average balance requirement as it faced public backlash for netting profits over penalty fees, as reported by Economic Times.
At present, the minimum average balance (MAB) is Rs 3,000 for metro cities, Rs 2,000 for semi-urban and Rs 1,000 for rural areas.
SBI has also plans to change the requirement from monthly average balance to quarterly average balance. During April-November 2017, the bank has netted a windfall of Rs 1,771.67 crore from customers for non-maintenance of monthly average balance in savings accounts. In the July-September quarter, the bank profited Rs 1,581.55 crore from collecting fines for not maintaining the MAB, the amount which is more than its second-quarter profit.
According to ET sources, the bank is looking at bringing down the MAB to Rs 1,000 but is yet to take a call. The bank has apparently been coming to this decision as it faced huge public backlash for profiting with fines.
SBI has close to 40.5 crore savings account customers. From April 1, 2017, the bank had reintroduced the monthly average balance (MAB) charges after a gap of five years. Later, as it received flak from customers, it reduced the charges with effect from October 1.
Also, pensioners, beneficiaries of government schemes and minors are exempted from levy of minimum balance charges with effect from October 1. The bank has specified different monthly average balances (MAB) for accounts held in different types of branches, i.e. metro, urban, semi-urban, rural.
Under SBI Basic Savings Bank Account, the customers are not required to maintain any specific monthly average balance.
Failure to maintain minimum balance in accounts attracts a penalty. The amount of penalty depends on the degree of shortfall. According to the bank's revised charges, the charges are Rs 100 plus taxes. However, the urban customers are fined if they fail to maintain 75 percent of the minimum required balance. If the shortfall is 50 per cent or less, then the bank charges Rs 50 plus service tax. For rural areas, the penalty ranges from Rs 20-50 plus service tax.