SBI Reduces Penalty Limit For Non-Maintenance Of Minimum Account Up To 75%
State Bank of India is an Indian multinational, public sector banking and financial services company. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra.
The State Bank of India has 20% market share in deposits and loans among Indian commercial banks. The company is ranked 232nd on the Fortune Global 500 list of the world’s biggest corporations as of 2016.
SBI collected Rs 1,771 crore in the duration of total 8 months between April-November 2017, in the form of penalties from customers who could not maintain monthly average balance.
State Bank of India yesterday announced that the bank reduced the penalty charges on non-maintenance of a bank account’s average monthly balance by up to 75% effective from April 1. SBI took this crucial step as the bank had faced a public backlash for raking in huge profits by way of penal charges.
LSBI had re-introduced the penal charges on non-maintenance of average monthly balance on last April, after a gap of five years. Later in October, the bank had revised down the charges to some extent.
The charges for non-maintenance of AMB for customers in metro and urban centres have been reduced from Rs 50 to Rs 15 a month. For semi-urban and rural centres, the penalty has been reduced from Rs 40 to Rs 12 a month. In addition, Rs 10 GST charges will be applicable over and above the specified rates.
However, the bank’s recent move has no effect on the monthly minimum balance requirement which has been retained at Rs 3,000 for metro customers, at Rs 2,000 for semi-urban accounts and at Rs 1,000 for rural accounts. The move will eat into the fee income of the bank, which had reported the first quarterly loss in 20 years, as it had to make huge provisions for bad loans.
The bank has strong deposit franchise having 41 crore savings accounts and the above revision will benefit around 25 crore customers. The country’s largest lender’s penalty on customers for non-maintaining minimum balance is much less than its private sector peers, though.
The bank added that if the customer wants to avail basic savings bank facilities without being subject to maintenance of AMB, they can convert the regular savings bank account to Basic Savings Bank Account which is free of charge.
SBI Managing Director for retail and digital banking P K Gupta further added to this move of SBI by stating that these changes have been done by keeping in mind the feedback and sentiment of our customers.