In a written reply in the Lok Sabha, Pankaj Chaudhary, minister of state for finance, says, "Reserve Bank of India (RBI) vide its circulars dated 20 November 2014 and 1 July 2015 has laid down guidelines regarding levy of penal charges on non-maintenance of minimum balances in savings bank accounts and regarding customer service in banks. Banks were permitted to fix penal charges regarding non-maintenance of minimum balance in a savings account, as per their board-approved policy while ensuring that penal 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 the account. Accordingly, Banks have formulated slab structures for recovery of charges considering different geographies and segments."
Information shared by the minister shows that during FY19-20, 10 PSBs, excluding Punjab & Sind Bank and including SBI, collected Rs919.44 crore from customers for failing to maintain the monthly average balance in their accounts. By FY23-24, this jumped to over two and a half times to Rs2,331.08 crore, excluding SBI and including Punjab & Sind Bank.
This is quite a huge amount considering that in FY19-20, SBI's share in the collection was nearly 70%, or Rs640.19 crore, out of Rs919.44 crore.
Three members of Parliament (MPs), Selvaraj V, Subbarayan K and Mala Roy, have asked for information on MAB charges collected by PSBs over the past five years, the principles of 'reasonableness' adopted in fixing these charges and whether the government proposes to rationalise the charges on non-maintenance of MAB in savings bank accounts.
According to the information shared by Mr Chaudhary, RBI circulars of 26 December 2002 and 20 November 2014 mandate banks to inform customers of the requirement of minimum balance while opening an account. "In case of non-maintenance of minimum balance, the bank should notify the customer about the penal charges which will be applicable if the balance is not replenished within one month from the date of notice. It should be ensured that savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance."
Further, there are no MAB charges for account-holders under the basic savings bank deposit account (BSBDA) scheme, the minister says, adding, "For all other types of bank accounts, banks are competent to provide any value-added service, free of cost, as per their board approved policy."
During the past five years, Punbaj National Bank (PNB) collected Rs1,537.87 crore, the highest charges from customers for non-maintaining MAB in their accounts. On the other hand, Indian Overseas Bank (IOB) collected just Rs19.75 crore penalty, the lowest among 12 PSBs, from customers during this period.
The bank that collected the second largest penalty from customers for non-maintenance of MAB is Indian Bank at Rs1,466.35 crore, followed by Bank of Baroda at Rs1,250.63 crore and Canara Bank with Rs1,157.89 crore collection.
According to the Lok Sabha reply, four lenders, Bank of Maharashtra, Canara Bank, Central Bank of India and Indian Bank, impose penalties on non-maintenance of monthly average balance. Seven lenders, Bank of Baroda, Bank of India, Indian Overseas Bank, Punjab & Sind Bank, PNB, UCO Bank and Union Bank of India levy penalties on non-maintenance of quarterly average balance.
Coming back to Moneylife Foundation's study, it found 14 banks, out of 23, having a slab structure wherein, for each slab, the penal charges are constant in rupee terms, i.e., they are not a fixed percentage of the shortfall even within each slab. These banks impose a disproportionately higher penal charge in the lower slab of shortfalls than in the higher slabs.
