The Reserve Bank has said that it has not issued any specific instructions prescribing the amount of minimum balance to be maintained in savings bank (SB) accounts.

This was conveyed to Samir Ghosh, General Secretary, All India Reserve Bank of India Employees Association, in response to his letter inviting attention to recent reports over the ‘injustice’ meted out to small depositors of State Bank of India.

Banks have the freedom to determine the quantum of minimum balance to be maintained by their depositors in savings bank accounts, subject to conditions that at the time of opening savings bank accounts, banks should inform their customers in a transparent manner the requirement of maintaining a minimum balance, and inform, at least one one month in advance, the existing account holders of any change in the prescribed minimum balance.

Penalty

Levy of penalty on non-maintenance of minimum balance in savings account is subject to the following conditions: a) the bank notifies the customer clearly by SMS/email/letter that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable.

b) In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of the shortfall, penal charges may be recovered under intimation to the account holder.

(c) As for zero balance in savings account, banks are advised to offer a ‘Basic Savings Bank Deposit Account’, which shall not have the requirement of any minimum balance, and should be considered a normal banking service available to all with minimum common facilities.

Service charges

As for service charges on various banking transactions, the RBI has not issued any specified instructions. But, in terms of extant instructions with effect from September 7, 1999, scheduled commercial banks have been given the freedom to fix service charges for various types of services rendered by them.

While fixing service charges, banks have been advised to ensure that the charges are reasonable and not out of line with the average cost of providing these services.

Banks have also been advised to identify basic services and the principles to be adopted/followed by them for ensuring reasonableness in fixing such charges.

They are also advised to take steps to ensure that customers are made aware of the service charges upfront and that changes in the service charges are implemented only after prior notice to customers.

Guidelines issued are applicable to all scheduled commercial banks (excluding Regional Rural Banks) and the same are expected to be followed by banks in letter and spirit.

In the guidelines, however, Reserve Bank may permit banks to exercise their own commercial judgement/discretion. In such cases, banks can exercise their own commercial judgement/discretion.

(This article was published in the Business Line print edition dated December 8, 2017)

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