State-run Punjab National Bank (PNB) has decided to hike the minimum quarterly average balance (QAB) to Rs10,000 in the four metro cities of Delhi, Mumbai, Kolkata, Chennai. The public sector bank (PSB) has also decided to increase charges for various services by up to 50% from 15 January 2022
. Interestingly, the table below shows that the Bank is using the term ‘minimum’ balance as well as ‘average quarterly balance’ almost internchangably. If it has changed its rules to mean ‘minimum’ balance, this means that a metropolitan customer will be penalised if the balance falls below Rs10,000 in a savings account, even for a day.
With ICICI Bank announcing a sharp increase in credit card-related charges and penalties and PNB announcing a hike in other bank charges, it is a matter of time before all other banks announce similar revisions. The charges announced by PNB are steep and bound to see customers move away from larger banks to new private banks or payment banks, which have lower charges or less onerous conditions.
PNB has also doubled charges per quarter for not maintaining a minimum balance in accounts for all customers. For customers in rural and semi-urban areas, the (penalty) charges are being increased to Rs400 from Rs200, while for urban and metro, it would be Rs600.
Earlier, PNB customers from urban and metro cities were clubbed together and had to keep the QAB of Rs5,000.
Punjab National Bank has announced a 50% increase its charges for revalidation or cancellation of draft and other instruments from Rs100 to Rs150 per instrument. Similarly, charges for return of outward cheques or bills have been increased to Rs150 per instrument from Rs100 for the instrument value of up to Rs1 lakh. For values above Rs1 lakh, the charges are increased to Rs250 per instrument from Rs200.
While increasing charges for locker rental for medium size by Rs1,000 for rural, semi-urban and urban and metro areas, PNB has restricted the number of free visits to 12 from 15 earlier. After the free 12 visits, the customer will have to pay Rs100 per visit for every visit to the locker.
Pune-based activist Vivek Velankar says, after failing to recover its dues from defaulters, Punjab National Bank seems to be trying to earn money from all other customers. He says, “In reply to my right to information (RTI) application, PNB says, it wrote off loans worth Rs46125 crore of 148 big defaulters who owe more than Rs100 crore over the past five years till financial year (FY)20-21. Out of this, PNB could recover less than 10% or Rs4516 crore.”
He further says the notification issued by PNB for increasing charges unilaterally is against the circular issued by the Reserve Bank of India (RBI). “As per the RBI circular, banks cannot levy a fixed penalty for not maintaining QAB. It needs to be directly proportionate to the extent of shortfall in QAB and even before that, the bank is mandated to notify the customer about the shortfall and levy penal charges only after giving the customer time to restore QAB. So how can PNB issue the circular that has fixed penalty charges for not maintaining QAB?” he asks.
The November 2014 circular issued by RBI asks banks to inform their customers about fall in minimum balance well in advance and levy penal charges only to the extent of the shortfall in such balances.
(Source: RBI Circular dated 20 November 2014)
In the event of a default in maintaining a minimum balance, banks should notify customers clearly by SMS, email or letter, giving them one month to restore the balance to avoid penal charges.
RBI says banks should not take undue advantage of customers’ difficulty or inattention. “Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit the services available on such accounts to those available to basic savings bank deposit accounts and restore the services when the balances improve to the minimum required level,” the circular says.
The central bank had also asked banks to ensure that the balance in the savings account does not turn into a negative balance solely because of the levy of charges for non-maintenance of minimum balance.
In 2017, Moneylife Foundation submitted a memorandum about the unfair charges levied on customers