The State Bank of India said it is looking at revising minimum balance amount and penalty charges in the wake of all-round criticism for raking in a windfall profit of over Rs 1,771 crore from customers in penalty for non-maintenance of monthly average balances in their savings accounts.
The country’s largest lender which has over 402 million savings account holders, had reintroduced monthly average balance (MAB) charges from April 2017 after a gap of five years. Accordingly, the bank demands Rs 5,000 in MAB in metros and Rs 1,000 in rural accounts, failing which it charges a penalty.
As a result, between April and November 2017, the bank had netted a windfall of Rs 1,771.67 crore, which is more than its second quarter profit, as penalties from customers for non-maintenance of MAB, finance ministry data showed.
“A review of the monthly average balance is something we’ve been looking at continuously since we had brought it back in April and we have already brought it down in October a bit. Now we are in the process of reviewing it again,” MD for retail and digital banking, PK Gupta, told reporters in Mumbai on Thursday.
He said the bank is doing a comprehensive review of the MAB and penalty for non-maintenance of the same, based on the feedback it has received and will soon announce it.
Currently, the bank has a MAB of Rs 3,000 for the metro and urban accounts and the non-maintenance penalty varies Rs 30-50 plus taxes.
For semi-urban and rural branches, the amount is fixed at Rs 2,000 and Rs 1,000, respectively and the penalty for non-maintenance is in the range of Rs 20-40 plus taxes.
SBI has close to 40.5 crore saving bank account customers.
SBI had reintroduced monthly average charges from April 1, 2017, but had to revised downwards the penalties for non-maintenance of the minimum balance from October 1, after facing backlash from customers.
While between April and October, the MAB was Rs 5,000 for metro accounts, which was brought down to Rs 3,000 per account. The penalty was also reduced from Rs 50-100 to Rs 20 -40, plus taxes.
The bank recently said on an average balance of Rs 3,000 in the metros, SBI earned only Rs 6 a month whereas for a minimum balance of Rs 1,000 in rural, it earned on Rs 2 per month which is meagre compared to the services offered and the corresponding costs incurred by the bank (free cheque books, 8 free ATM transactions, free branch transactions).
The bank had said savings bank accounts such as Prime Minister’s Jan Dhan Yojana, small accounts and basic savings bank deposit accounts, pensioners, minors and all social beneficiary accounts are exempted from MAB requirement and no charges ever have been recovered.