SBI likely to reduce minimum balance requirement for savings accounts
The State Bank of India (SBI) is said to be reviewing its minimum balance requirement and likely to lower it in urban areas. SBI's current minimum balance for urban areas is Rs 3,000, while for semi-urban and rural areas it is Rs 2,000 and Rs 1,000, respectively.
SBI had originally increased the minimum balance requirement to Rs 5,000 in June. However, following public backlash the bank brought it down to Rs 3,000 in urban areas.
SBI is reviewing its minimum balance requirement following a finance ministry reports which showed that SBI collected Rs 1,771 crore during April-November 2017 as a penalty from customers for non-maintenance of monthly average balance in savings accounts. Failure to maintain the required monthly average balance or minimum balance in SBI's savings bank accounts attracts a penalty. The amount of penalty depends upon the degree of the shortfall.
SBI had earlier defended the charging of penalties, saying that it was meagre compared to services it provided. A statement by SBI had said, "On an average balance of Rs 3,000 in the metro, SBI earns Rs 6 only per month, whereas for a minimum balance of Rs 1,000 in rural, bank earns Rs 2 per month which is meagre when compared to the services offered."
RBI guidelines mandate that charges for non-maintenance of minimum balance in savings bank accounts be "reasonable".
Although SBI's minimum balance requirement of Rs 3,000 is lower if compared with private banks, several public sector banks charge a lesser penalty if the customer fails to maintain a minimum balance.