Govt asks SBI to reconsider minimum balance penalty

The government on Monday asked State Bank of India (SBI) to reconsider its decision to levy penalty on non-maintenance of minimum balance, which the bank plans to hike manifold from April 1 impacting over 310 million savings bank account holders.

SBI, according to a source, has also been asked to reconsider charges it proposes to levy on cash transactions and ATM withdrawals over specified limits.

The country’s largest lender has announced imposing penalty ranging from Rs 20-100 on non-maintenance of minimum average balance (MAB) in savings bank accounts from April 1.

The penalty is as high as Rs 500 in case of current accounts.

The penalty for breach of MAB is being reintroduced after a gap of five years.

The bank has also increased the minimum balance requirement by many times, which is as high as Rs 5,000 for account maintained with branches in six metro cities.

SBI has also imposed restrictions on withdrawals of cash from its branches as well as ATMs. These will attract charges after certain specified limits.

"Government has asked SBI to reconsider it's decision to impose a penalty on non- maintenance of minimum balance in accounts from April 1 onwards," the source said.

The government has also urged SBI and other lenders, including private sector banks to "reconsider the charges on cash transactions and ATM withdrawals above a certain limit".

Some private banks, like HDFC Bank, ICICI Bank and Axis Bank, have started charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.

Points to consider:

* SBI has been asked to reconsider charges it proposes to levy on cash transactions and ATM withdrawals over specified limits

* The bank has announced penalty ranging from Rs 20-100 on non-maintenance of minimum balance in savings bank accounts from April 1

* The penalty is as high as Rs 500 in case of current accounts

* Penalty for non-maintenance of minimum balance is being reintroduced after a gap of five years

* The bank has also increased the minimum balance requirement to Rs 5,000 for an account maintained with branches in six metro cities