From the next financial year (i.e. as of 1st April 2017), the State Bank of India (SBI) will reintroduce penalties for failure to maintain a minimum account balance. There will also be a revision of charges for usage of several other services, including ATMs.
Charges on cash deposits at SBI
SBI will allow bank account holders to deposit cash up to 3 times a month, free of charge. Every subsequent transaction, however, will attract a penalty of Rs.50 plus service tax. The penalty for current accounts could go up to Rs.20,000.
SBI penalty for non-maintenance of Minimum Account Balance (MAB)
The Reserve Bank has also provided permission for banks to levy penalty on accounts that do not maintain a minimum balance.
The revised charges released by SBI indicate that if a customer fails to maintain a Monthly Average Balance (MAB) in his/her SBI account, it will attract a penalty of up to Rs.100 plus service tax. Effectively, in metros, a charge of Rs.100 plus service tax will be levied if the balance falls below 75% of the MAB of Rs.5,000. If the balance is lower than 50% of the MAB, the charge will be Rs.50 plus service tax.
The MAB and charges vary based on the location of the bank. The lowest charges are applicable in rural branches of the SBI.
The bank had stopped levying charges for breach of minimum account balance in 2012 in an attempt to expand their customer base. SBI had also targeted generation of low-cost deposits since savings accounts only offer interest at rates up to 4%.
The demonetization drive saw SBI opening a large number of savings accounts, specifically till the end of December, 2016. Management of these accounts, including those with zero- balance, involve large expenses. The decision to reintroduce penalty charges was made to generate an outflow of money from savings accounts, particularly those that were opened recently. At a high level, the charges are calculated based on the gap between MAB and the actual account balance.
SBI cash withdrawal charges
When a customer withdraws cash from an ATM of another bank, he/she will be charged up to Rs.20 if there were more than 3 such transactions in a month. The charge will be Rs.10 for more than 5 transactions from SBI ATMs.
However, SBI will not charge any amount for withdrawal from its own ATMs, as long as the account balance is more than Rs.25,000. For withdrawal from other bank ATMs, there will be no charge levied if the account balance is greater than Rs.1 lakh.
SBI will also charge Rs.15 every quarter for SMS alerts to debit card holders with average quarterly account balance of up to Rs.25,000. Transactions of up to Rs.1000 through UPI/USSD will not attract any charges.
Private banks and MAB breaches
Private players like HDFC Bank, ICICI Bank, and Axis Bank have recently announced that a penalty of Rs.150 will be charged after four free cash transactions at their branches. The SBI fine for minimum balance is an exercise to encourage customers to utilise digital payment modes as opposed to branch transactions, a movement towards globally accepted practices.
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