New Delhi: Stung by widespread public criticism, the State Bank of India (SBI) on Tuesday slashed the charges that penalised its customers for not keeping ‘minimum balance’ in their saving accounts.
In a move that will provide widespread relief to over 25 crore account holders, the revised average minimum balance (AMB) rates have been cut by up to 75% and will be applicable from April 1.
SBI said that the decision to slash AMB was taken keeping in view the feedback received from various stakeholders. The charges for non-maintenance of AMB for customers in metro and urban centres have been reduced from Rs 50 to Rs 15 a month. For semi-urban and rural centres, the penalty has been reduced from Rs 40 to Rs 12 a month. In addition, Rs 10 GST charges will be applicable over and above the specified rates.
As The Wire has reported, during April-November 2017, SBI collected Rs 1,771 crore in penal charges from its customers, which was more than its net profit of Rs 1,581.55 crore for the same period. The public sector lender faced widespread flak for its minimum account balance charges, which were seen as hitting mostly financially weaker account holders.
SBI restored AMB charges last April after a gap of six years. But it later revised it downwards in October based on feedback from stakeholders.
It slashed service charges for non-maintenance of AMB by 20-50%. Earlier, metro and urban customers were charged Rs 40-100 for not maintaining minimum balance. This penalty was brought down to Rs 30-50. The charges at semi-urban and rural centres were also revised to Rs 20-40 from Rs 25-75.
Jan Dhan Yojana accounts, basic savings bank deposits accounts (BSBD), pensioners, beneficiaries of social benefits from the government and accounts of minors are exempted from complying with the minimum balance requirement. Besides, students aged below 21 years are also not required to maintain minimum balance.
“Bank has always focused on keeping the interests of its customers first and this is one of our many efforts towards fulfilling customer expectations. Bank also offers its customers to shift from regular savings bank account to BSBD account on which no charges are levied,” P.K. Gupta, managing director, SBI, said in a statement.
Public sector banks (PSBs) are reeling under bad loans. The combined non-performing assets (NPAs) of 21 listed PSBs had risen to more than Rs 7 lakh crore at the end of September last year. The government has brought the Insolvency and Bankruptcy Code to help expedite the resolution of bad debts. Besides, it has unveiled a Rs 2.11 lakh crore recapitalisation plan.
SBI reported a net loss of Rs 2,416 crore for the December quarter as it had to make provisions for rising bad loans.
AMB charges are levied by private banks too.