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The top three private sector banks have tightened their minimum savings bank deposit balance norm.
Against the normal practice of maintaining minimum average quarterly balance, these banks want customers to maintain minimum balance on a monthly basis. What this means is that customers will have to keep higher balances.
The move to get customers to maintain minimum balance on a monthly basis follows the Reserve Bank of India deregulating the savings bank deposit rate in October 2011. The RBI has not stipulated any minimum balance to be maintained in savings accounts to any bank. The RBI guidelines only state that accountholders should get from their banks a month's notice on any change in the minimum balance norm.
ICICI Bank's minimum monthly balance requirement is Rs 10,000 at metro and urban locations; Rs 5,000 at semi-urban branches; and Rs 2,000 in rural areas.
Similarly, the minimum monthly balance requirement at metro and urban areas is Rs 10,000 for Axis Bank and HDFC Bank. In the case of semi-urban areas, the minimum balance requirement is Rs 5,000 for the two banks. In rural areas, the minimum balance requirement is Rs 5,000 in the case of HDFC Bank and Rs 2,500 in the case of Axis Bank.
These private sector lenders have also tweaked the penalty charge for non-maintenance of minimum monthly balance. Charges for HDFC Bank and ICICI Bank range between Rs 250 and Rs 350; while, those of Axis Bank are Rs 750 (metro and semi-urban) and Rs 500 (rural).
According to Ms Chitra Pandeya, Senior President, YES Bank, the lenders are targeting good quality customers through the move. When minimum balance has to be maintained on a monthly basis, customers will keep enough funds in their accounts to ensure that they do not have to pay non-maintenance charges.
Analysts say the switch to monthly maintenance of balance is a positive for banks' margins. “This will generate higher float money via the saving account balances,” a banking analyst said.
The largest PSU lender, State Bank of India, which had imposed charges for non-maintenance of minimum balance a few months ago, rolled back the move.
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