Minimum balance levy to cut burden of Jan-Dhan a/cs: SBI

Failure to maintain Monthly Average Balance will attract penalty of up to Rs 100 plus service tax

State Bank of India (SBI) has defended as rational its decision to levy a charge on those of its depositors who fail to maintain a stated average balance in their accounts.

It says most savings accounts already have amounts above this threshold. And, the move is aimed to partly cover the costs incurred on managing a customer account.

“Among all banks, SBI has the lowest minimum balance requirement. All banks have this requirement for an account. We were the only one to withdraw it, in 2012,” SBI chief Arundhati Bhattacharya told reporters on the sidelines of an event here, organised by the India SME Forum.

The country’s largest bank will not slap a penalty for non-maintenance of a minimum balance in accounts opened under the Jan-Dhan Yojana, the national scheme aimed to further financial inclusion. The chief says the bank has to bear the burden (costs of operation and systems) of 110 million such accounts. To manage such a large number, some charges are needed, she said.

Asked about a reported suggestion from the government to reconsider the decision, SBI managing director Rajnish Kumar said, “There is no formal communication. We will see if something comes.”

From the beginning of the next financial year on April 1, failing to maintain a monthly average balance (MAB) in your SBI savings account will attract a charge.  SBI had suspended this charge in July 2012, to expand its customer base and generate low-cost deposits, as those in a savings account earn annual interest of only four per cent. 

The charge will be calculated on the gap between the MAB and the actual balance. The MAB for those with accounts at branches in metropolitan areas would be Rs 5,000. If the difference between the MAB and actual amount is 50 per cent or Rs 2,500, SBI will slap a charge of Rs 50. If the difference is between 50 and 75 per cent, the charge is Rs 75. Till 100 per cent, it will charge Rs 100. For rural areas, the MAB is Rs 1,000. The penalty for not maintaining MAB is also much lower there.

“We have considered many factors and taken this step after carefully analysis. We have found most account holders maintain more than Rs 5,000 on a monthly basis and so they do not have to worry about any penalty,” Bhattacharya said.

SBI’s peers in the public sector banking space are already levying such a fine. Punjab National Bank (PNB), Bank of Baroda (BoB), Bank of India (BoI) and Canara Bank already charge a levy for failing to maintain a minimum balance for a quarter or a month.

Rural customers of Delhi-based PNB need to maintain a quarterly average balance (QAB) of at least Rs 500. For those in semi-urban, urban and metropolitan areas, the QAB is Rs 1,000. Charges for not maintaining the minimum QAB vary between Rs 15 and Rs 20, depending on location and deficit in the account, according to the bank’s website. BoB and BoI, both Mumbai-based large lenders, also follow the practice of QAB.