March 19, 2018

SBI reduces charges for non-maintenance of average minimum balance

13 March 2018, 10:35 | Cesar Cruz

State Bank of India- File

State Bank of India- File

In April 2016, the SBI had re-introduced the penal charges on non-maintenance of average monthly balance after a gap of five years.

Tuesday reduced charges for non-maintenance of average minimum balance (AMB) in savings accounts by up to 75 per cent.

The decision came after SBI faced massive criticism that the bank earned a sum of Rs 1,771 crore in just 8 months from depositors who failed to maintain the average monthly balance in their bank accounts.

SBI has also slashed charges for not-maintenance of Rs2,000 as ABM in bank accounts in semi-urban areas to Rs7.50-12 and Rs1,000 in accounts in rural area to Rs5-10. In the big cities, account holders have to keep at least 5,000 rupees, account holders in urban areas, 3,000 rupees, account holders in small towns and Rs. 1,000 in rural areas to keep a minimum amount of 1,000 rupees. "We have reduced these charges taking into account the feedback and sentiments of our customers", SBI's managing director (retail and digital banking) P.K. Gupta said.

In October previous year, SBI had slashed service charges on not maintaining monthly average balance by a whopping 20-50%. "Bank has always focused on keeping the interests of its customers first and this is one of our many efforts towards fulfilling customer expectations". The amount recovered from the fine amounted to be more than the profits of the bank's Rs 1,581.55 crore in July-September and almost half of the net profit of Rs 3,586 crore in April-September.

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According to release, for semi-urban centres, the charges have been reduced from Rs 40 to Rs 12 per month plus GST and for rural centres.

In this case, the SBI Bank has replaced the penalty again.

Furthermore, there is nil minimum balance amount in BSBD account, also there is no upper limit set for maintaining maximum balance.

So his MAB would be (Rs 70,000+Rs 42,000) divided by 28, i.e. Rs 4,000.

AMB charges are levied by private banks too. This was more than its September quarter profit of Rs 1,581.55 crore. Exempted accounts are those related to Pradhan Mantri Jan Dhan Yojana, basic savings bank deposit account, and accounts of pensioners and minors, among others. The bank clarified that customers always had the option of converting the regular savings bank accounts to basic savings bank account (BSBD account) to avoid incurring charges for non-maintenance of account balance.

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