Following criticism, SBI looks at revising minimum balance amount and penalty

Peer review to keep SBI bosses on toes

Customers fail to maintain the required minimum balance will have to bear a penalty which leads to deduct a specific amount up to Rs. 100 plus service tax from the customer's account.

The bank in an earlier statement said it had revised the requirement of maintaining monthly average balance (MAB) and the charges for non-maintenance of MAB in savings accounts.

A finance ministry data, released this week, showed that SBI netted a windfall of Rs 1,771.67 crore, more than its second quarter profit, from customers for non-maintenance of monthly average balance in savings accounts in eight months of 2017-18. The bank has specified different monthly average balances (MAB) for accounts held in different types of branches, i.e. metro, urban, semi-urban, rural.

The charges collected by SBI for non-maintenance of minimum balance exceeds the bank's July-September quarter net profit of Rs 1,581.55 crore. The amount was also almost half of the Rs 3,586 crore the bank earned as net profit from April to September.

After the government expressed its dismay over the new minimum average balance (MAB) rule, the bank in its explanation said that it was necessary to increase the minimum balance limit as, according to the bank, it was not making much profit from these accounts.

SBI has around 420 million savings bank accounts, of which around 130 million are exempted from MAB requirement.

The customer can now maintain quarterly average balance (QAB) instead of monthly average balance, the statement isssued earlier said.

The bank subsequently lowered the MAB following criticism from the customers. The SBI, after a gap of six years, had reintroduced the monthly average balance (MAB) charges from April 1, 2017.

"The Bank has a very strong deposit franchise having 41 crore savings bank accounts out of which 16 crore accounts under PMJDY / BSBD and of pensioner, minors, social security benefit holders were already exempted".

The MAB for semi-urban areas has been unchanged at Rs 2,000, but penalties for non-maintenance have been slashed for this group.

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