India’s largest public sector lender State Bank of India (SBI) is likely to cut its minimum balance requirement to Rs.1,000 in metros for all its savings accounts. This decision might have been the result of public criticism over the profits accumulated by SBI in the last fiscal through minimum balance penalties.
A few days ago, reports emerged that SBI has collected Rs.1,771 crore in penalties for non-maintenance of minimum balance by account holders. This penalty amount was collected during the 6-month period between April and November 2017. The report also pointed out that this amount was higher than SBI’s July to September quarter profit of Rs.1,581.55 crore. This huge collection of penalty amount from poor customers resulted in widespread criticism against SBI.
As of now, SBI’s minimum balance requirement in metros is Rs.3,000. For semi-urban and rural areas, the requirement is Rs.2,000 and Rs.1,000 respectively. According to sources, SBI is currently looking forward to lower this limit to Rs.1,000 in metros. The minimum balance requirement of Rs.3,000 is the highest among public sector banks. However, this is the lowest among the private sector banks operating in the country.
SBI is also facing pressure from the government for reintroducing the minimum balance requirement. These charges are reintroduced this fiscal year after a break of five years. SBI defended these charges stating that the charges are marginal compared to the benefits offered to customers free of charge.
When SBI originally introduced these penalties in April 2017, the minimum balance requirement was Rs.5,000 in metros. This was lowered to Rs.3,000 from September onwards. With effect from October, SBI relaxed this requirement for pensioners, accounts of children, and beneficiaries of social welfare from the government.
For the April to November period, the country’s second-largest public sector lender Punjab National Bank collected penalties of Rs.97.34 crore.
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