Minimum Balance Charges at PSU Banks | Penalty you need to pay if you fail to meet guidelines? Essential details you must know
Minimum Balance Rules at PSU Banks: Do you know how much money you pay in charges and fees for failure to maintain the required balance in your savings account at a public sector (PSU) bank? The government recently shared some interesting details about the recent trends in the penalties, covering a wire range of aspects.
Do you know how much money you pay in charges and fees for failure to maintain the required balance in your savings account at a public sector (PSU) bank? Minister of State for Finance Pankaj Chaudhary shared some interesting details about the recent trends in these areas, covering a range of aspects such as the amount of fees payable, the criteria behind calculating these charges, and the central government’s take on the rationalisation of these charges. Here is a summary of his submission in the Lok Sabha in response to questions raised by some members about the penalties that PSU banks impose on customers failing to maintain the Average Monthly Balance (AMB) in their savings accounts.
Average Minimum Balance at PSU Banks | Are there charges for not maintaining the required monthly balance average?
Do PSBs charge customers for not meeting the average monthly balance or AMB requirements?
Yes.
The minister informed the Lok Sabha that each bank sets its own charges based on its policies. These charges vary from bank to bank and have been in place for the last five years.
Average Minimum Balance at PSU Banks | How are these charges calculated?
As per the RBI's circulars from November 20, 2014, to July 1, 2015, banks can set their own penal charges for not maintaining the minimum balance.
Average Minimum Balance at PSU Banks | How are these charges calculated?
These charges must be a fixed percentage of the difference between the required minimum balance and the actual balance in the account.
Banks have created different charge structures based on where the customers are located and the type of customers they serve.
Average Minimum Balance at PSU Banks | Are these charges fair?
As per the RBI guidelines, banks are required to inform their customers about the minimum balance requirement at the time of opening the account. If the requirement changes, banks must inform the customers. If a customer does not maintain the minimum balance, the bank must notify them about the charges and give them one month to add money to their account.
This way, customers are not caught off guard and have time to avoid penalties.
Moreover, banks must ensure that penalty charges do not cause an account to have a negative balance.
Average Minimum Balance at PSU Banks | Government’s position on rationalisation of charges
Responding to the concern raised by some members about whether the government plans to change or reduce these charges, the Minister of State for Finance said that while the current guidelines already aim to be fair, the government continuously reviews the situation.
Average Minimum Balance at PSU Banks | Government’s position on rationalisation of charges
However, the minister also pointed out that there are no immediate plans to make changes to the existing charges.
The guidelines ensure a fair approach that balances the banks' costs and the customers' interests.
Average Minimum Balance at PSU Banks | Are there any savings accounts that are exempted from these requirements at PSU banks?
In a bid to promote financial inclusion, PSU banks offer Basic Savings Bank Deposit Accounts (BSBDAs). What are these accounts and what are the advantages that these accounts offer?
Average Minimum Balance at PSU Banks | BSBD account holders are not only not required to meet such requirements, they also get a host of free services
Here is a list of such free services:
Depositing cash at bank branches and ATMs.
Receiving and crediting money through electronic transfers or cheques from government agencies
Unlimited deposits per month
Average Minimum Balance at PSU Banks | Other benefits of BSBD accounts
At least four withdrawals per month, including ATM withdrawals
An ATM or ATM-cum-Debit card
Average Minimum Balance at PSU Banks | Conclusion
While banks do charge for not maintaining the AMB, the RBI ensures that these charges are reasonable and communicated clearly to customers.
Average Minimum Balance at PSU Banks | Conclusion
Also, the BSBDAs offer basic banking services for free, supporting financial inclusion.