SBI recovering service charges, penalty from student scholarship: Report
Moneylife Digital Team 21 August 2017
State Bank of India (SBI), the country’s largest lender is deducting charges and penalty from zero balance savings accounts of several students, says a news report.
According to a report from Dainik Bhaskar, SBI is deducting charges even from zero balance accounts of poor students, whose scholarship amount is less than what the bank mandates as minimum average balance (MAB). The state-run lender mandated to keep minimum balance of Rs5,000 for metro  area, Rs3,000 for urban area, Rs2,000 for semi-urban area and Rs1,000 for rural area, failing to which it levies penalty charges. 
"For the students even a charge of Rs50 per month or Rs600 per year for not maintaining MAB is more than what they would receive as scholarship. This is just for maintenance charges. In addition, the bank would levy penalty charges of Rs50 every quarter or Rs200 for not maintaining MAB. This means, the bank would recover from students Rs800 per year just for not maintaining minimum average balance in the account. If the student is receiving only Rs600 or Rs800 as scholarship, then what is there for him if all the money is siphoned off by the bank as penalty and charges?" the report says. 
The decision has affected lakhs of students from across the states since almost all banks are now levying service charge and penalty for not maintaining minimum average balance in their accounts.
According to Dainik Bhaskar, four states, Delhi, Gujarat, Rajasthan and Haryana have reported such incidents. It says, "One student from Delhi's Vijay Nagar area was told by the SBI branch manager Rajnish Kumar that as per the guidelines, the penalty is levied as service charge from accounts with minimum balance."
In Delhi alone, lakhs of students are awarded scholarship for school uniforms, books and merit scholarship. However, very few students receive Rs5,000 or more as lumpsum. This Rs5,000 is the MAB for savings account in Delhi as mandated by SBI. "The scholarship is given by various departments and deposited directly into the student's bank account. Students withdraw money as and when required from such accounts. When the students are never given full scholarship amount in one go, why then there is MAB charge and penalty levied from them? With this calculations, students will end up paying Rs800 each just as maintenance charge and penalty to the bank," the report says. 
Ravindra Gupta from SBI told the newspaper that banks are levying penalty as per the permission from Reserve Bank of India. He said, "While there is no deductions from JanDhan accounts, where maximum Rs50,000 are deposited. The student accounts are opened as savings bank account and hence the bank is levying service charge of Rs30 to Rs100 from 1 April 2017."
From 1 June 2017, SBI has revised its service charges for basic savings bank deposit (BSBD) accounts. For BSBD customers, SBI allows four free withdrawals per month, beyond which the customer has to pay Rs50 per transaction at branch, Rs20 at other branch ATMs and Rs10 at SBI ATMs. These charges exclude service tax.
Moneylife Foundation has been at the forefront of speaking up for bank customers. Earlier, on 4th July, thousands of people joined the unique #TweetMorcha against arbitrary bank charges, with the hashtag #BankSeBachao trending at top spot in India and also featuring in worldwide trends that afternoon. People from across the globe sent tweets to @NarendraModi and @ArunJaitley with the hashtags of #BankSeBachao and #TweetMorcha. 
An online petition launched by us on has garnered more than two lakh signatures. (Sign the Petition).
The group, including well known NGOs, trade unions, finance editors and experts, had on 12 May 2017 presented a 1,100 page printout of over 100,000 signatures to an online petition at to M Veerappa Moily, Chairman of Parliamentary Standing Committee on Finance.
5 years ago
Similar is the situation if you are holding MOD ( Multi Optional Deposit). If you have a balance of Rs 5000/ in Savings Account and MOD balance of Rs 2 Lakhs and issue a cheque for Rs 4000/- the deficit amount will be drawn from your MOD deposit and the cheque will be paid. You will however be left with less than the minimum balance and will be charged a penalty though you may have fund in MOD A/C. This is another way of making money. The Banks are devising ways and means of making money;
5 years ago
Disgusting and shameful. This shows the level of the top management of the largest PSB of the country, devoid of the minimum human values. Will the govt intervene to educate the PSBs? All PSBs need proper grooming inter alia in customer relationship in the context of the PM's pet Digital India push. Why must these PSBs (IDBI Bank in particular) deny their customers access to their respective banks/bank managers/executives through e-mail is something that FM must inquire.
Vikash Singh
5 years ago
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