Maintain Minimum Balance in Your Account or Else Pay a Fine, Says SBI

In a country that accounts for the largest number of people living below international poverty line, it comes as a surprise that the banks are penalising people who have money less than the prescribed amount in your savings bank account. The banks this year have collected Rs 2,320.96 Crores in the form of penal charges from customers who were not able to maintain the monthly minimum average balance (MAB). An IE report states that State Bank of India (SBI) made most of the money – Rs 1771.67 crore – from April to November this year.

On April 1, 2017, SBI introduced penal charges for accounts that did not maintain a minimum balance of Rs 5,000 for metro cities. In the urban, semi-urban and rural areas the mandated minimum balance was Rs 3,000, Rs 2,000 and Rs 1,000, respectively. The amounts were later revised and from October the minimum balance was reduced to Rs 3,000 for metros.

If the account holder fails to maintain the required deposits SBI charges Rs 30 – Rs 50 for urban areas and metro cities; Rs 20 – Rs 40 for rural and semi-urban areas. In this manner, the bank collected Rs 1771.67 crores. Similarly, other Public and Private Sector Banks charged different levies.

Duggirala Srikrishna, General Secretary of the Jawaharlal Nehru University Students’ Union (JNUSU) said that in their university the students are given normal savings accounts and the SBI on the campus is deducting the money from the students' accounts. Eligible Undergraduate (UG)and Post-Graduate(PG) students of the University get a fellowship amount Rs 2,000 per month which is used to pay their mess and academic expenses. Even the Mphil/PhD students who get their non-NET UGC fellowship are given Rs 5,000 to 8,000 per month. They have to take care of all their expenses from this amount. To expect students to maintain a minimum balance of Rs 3,000 and charge fines for not maintaining it is cruel and lacks no logic.

Speaking on how this was affecting the students across the country, Vikram Singh, General Secretary, Students’ Federation of India said, “The government forces the students to first open bank accounts for availing meagre amounts of scholarship and then punishes them for not maintaining the minimum balance.” He added, “students have to pay Rs 600 per year for no fault of theirs and we would bring this to the notice of the officials concerned to rectify the anomaly.” Singh said they would organise protests across the country if the students were not exempted from this policy of the Banks.

These policies followed by the banks to charge the customers are against the regulations of the Reserve Bank of India (RBI), says a study ‘Fault Lines in Implementation of Minimum Balance Rule for Savings Bank Accounts in India’ conducted by Professor Ashish Das of Indian Institute of Technology Bombay. He says that “This high rate of penalty appears to have no correlation with the costs for arranging such funds at, say, the call money market rate,” and added “Thus it raises question of efficacy of regulation B (whereby it should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services) of the RBI’s guidelines on levy of charges for non-maintenance of minimum balance in savings bank account.”

Sitaram Yechury tweeted

Amassing peoples' hard-earned savings to loan to mega corporations who default. Nearly ₹3 lakh cr written off of their bad loans in past 3 years. The poor subsidise this open loot. #https://t.co/9nXD7l2xrM"pic.twitter.com/9nXD7l2xrM2 January 2018

Noted journalist Ravish Kumar said that this policy was similar to how the farmers had to pay cultivation taxes separately for cultivating indigo in Bihar during the British rule.