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Even after the country’s top lender State Bank of India decided not to levy penalty for maintaining minimum balance in accounts after FY20, amount collected by Public Sector Banks (PSBs) for the same has increased by over 34 per cent in five years.
According to data presented as part of written response to un-starred question in the Lok Sabha by the Minister of State (Finance) Pankaj Chaudhary, PSBs collected around ₹8,500 crore under this head in five years starting from FY20. Of the 11 PSBs, Punjab National Bank, Bank of Baroda, Bank of India, Punjab & Sind Bank, Union Bank of India Bank and UCO Bank collect penalty for not maintaining minimum of Quarterly Average Balance (QAB). However, Indian Bank, Canara Bank, Bank of Maharashtra and Central Bank of India levy penalty for not maintaining minimum Average Monthly Balance (AMB).
Collection mechanism
Various PSBs have different mechanism for collecting penalty. The website of Punjab National Bank shows a saving account customer needs to maintain minimum QAB of ₹2,000, ₹1,000 and ₹500 in urban & metro, semi urban and rural area, respectively. Not maintaining could lead to penalty up to ₹100, ₹150 and ₹250 in three geographies, respectively.
For a current account customer, minimum QABs for rural, semi-urban, urban and metro range are ₹1,000, ₹2,000, ₹5,000 and ₹10,000 respectively. Not maintaining this balance could lead to penalty between ₹400 and ₹ 600 depending upon the geography.
According to the website of Canara Bank, a savings account customer is required to maintain AMB of ₹2,000 in urban and metro area, while it is ₹1,000 in semi urban and ₹500 in rural area. Customer in all the three geographies will be required to pay penalty between ₹25 and ₹45 along with GST based on shortfall amount. For current accounts, AMB would be ₹1,000, ₹2,000, ₹5,000 and ₹7,500 in rural, semi urban, urban and metro, respectively. In case of shortfall, penalty of ₹60 per day, subject to maximum of ₹500 in a month would be levied along with GST.
Meanwhile, Chaudhary said banks must inform customers about the minimum balance requirement when opening an account and notify them of any changes. If the minimum balance isn’t maintained, the bank should notify customers of the penal charges, applicable if not rectified within one month. “It should be ensured that savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance,” he said.
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