PSU banks raising balance floor

PNB raises minimum account balance in a savings account from Rs 500 to Rs 2,000.

Taking a cue from private sector and foreign banks, nationalised banks have started charging their customers for different services. Punjab National Bank (PNB) is the first off the block and others are likely to follow soon.

PNB has increased the minimum account balance to be maintained by a depositor in a savings account from Rs 500 to Rs 2,000, if the customer wants 'anywhere, anytime banking' or multi-branch banking.

Bank of India may also look at introducing a similar feature. Currently, the branch managers at BoI have the discretion to offer the 'anywhere anytime banking' service to 'chosen' customers.

"We are looking at all the product profiles. We may introduce some parameters for giving facilities such as multi-branch banking as part of the business process re-engineering process we have undertaken," said a Bank of India official.

It may not be long before other public sector banks also bring about conditional increases in the minimum account balances to be maintained.

Private and foreign banks demand a minimum quarterly balance of anything between Rs 5,000 and Rs 20,000 in the savings account.

PNB has also introduced a fine of Rs 115 if customer does not maintain the Rs 2,000 balance, bank officials said. The bank thus passes on the infrastructure costs undertaken to offer core banking to the customer by demanding larger float of money.

The minimum balance without multi-branch banking remains at Rs 500.

PNB has 700 branches on the core banking system and these branches offer the multi-branch banking facility. Through multi-branch banking facility, a customer has the freedom to access his account in one branch from another branch of the same bank even if it is located in another city provided both the branches are on the core banking system.

Indian Banks' Association prescribes the minimum account balances that nationalised banks can demand from their customers. For the metro and urban branches, the minimum balance for a savings account (with cheque book facility) is Rs 500. In the rural or semi-urban branches, the minimum account balance is Rs 200 and Rs 1,000 in a computerised branch.

There are banks that charge service charges instead of stipulating a higher account balance. Union Bank of India, for instance, does not require a higher account balance from its customers for offering multi-branch banking but levies service charges for facilities like transfer of funds across cities and for multi-city cheque books. Union Bank of India has as many as 360 of its branches networked through the core banking system.