SBI minimum balance controversy: Bank breaks silence

SBI minimum balance controversy: Bank breaks silence

SBI minimum balance controversy: Bank breaks silence

The amount collected by the SBI - Rs 1,771 crore - is more than the bank's Q2 net profit (from July - September 2017) at Rs 1,581 crore, and almost half of the net profit in the half year, from April to September of 2017, at Rs 3,586 crore.

While the SBI had aimed for Rs 2,000 crore as penalty collection, at Rs 1,771 crore, it's not completely off target.

SBI had earlier revised the minimum account balance for its savings accounts, as well as the penalties for non-maintenance of minimum balance. This amount is determined on the basis of type of branch where the account is held and the degree of shortfall, between the balance maintained and the MAB required.

The distressingly stark contrast in which the biggest public sector bank as well as the largest lender in the country treats its customers from economically weaker sections, when compared to its serial overlooking of the staggering pile of bad loan incurred by wilful defaults by big corporates, becomes once again quite clear with the emergence of a fresh report. The bank also exempted pensioners, beneficiaries of social benefits from the government and accounts of minors from levy of these charges with effect from October 1.

Few days back, a study by an IIT-Bombay professor has claimed that public sector as well as private banks have been imposing unreasonable charges on customers for failing to maintain minimum balances in their savings accounts.

In India nearly all the banks charge a certain amount to account holders for non-maintenance of amount specified by banks.

The MAB for semi-urban areas has been unchanged at Rs 2,000, but penalties for non-maintenance have been slashed for this group. These charges were slightly relaxed in September when SBI reduced the MAB requirement for customers in metro cities to Rs 3000 from Rs 5000. The semi-urban SBI customer will have to pay Rs 30 if their MAB rests between Rs 999 and Rs 500, and not Rs 50 as they did before.

Most banks have fixed penal charges for non-maintenance of minimum balance in savings bank accounts at an average rate of 6.5 per cent of every month's shortfall, which is equivalent to a penal rate of 78 per cent per annum, according to a study, "Fault lines in Implementation of Minimum Balance Rule", by Ashish Das, Professor, Department of Mathematics, IIT Bombay.

Between April and September, SBI imposed these charges in metro, urban as well as rural centres.

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