Keep minimum balance in SBI accounts or pay levy

From the beginning of the next financial year (April 1), failing to maintain a monthly average balance (MAB) in your State Bank of India (SBI) savings accounts will attract a charge.

SBI had suspended this charge in July 2012 to expand its customer base and generate low-cost deposits, as those in savings accounts earn an interest rate of only 4 per cent. The bank said it was resuming the charge to partly cover costs for maintaining systems and operations of savings accounts. The charge will be calculated based on the gap between the MAB and the balance in the accounts.

According to an SBI communication, MAB for those with accounts in branches of metropolitan areas would be ~5,000. If the difference between MAB and the amount in the account is 50 per cent or ~2,500, SBI will slap a charge of ~50. If the difference is between 50 and 75 per cent, SBI will charge ~75, and till 100 per cent, it will charge ~100. (See chart)

For rural areas, MAB is lower — ~1,000. The penalty for not maintaining MAB is also much lower.

A senior SBI executive said the bank had, at present, 250 million savings accounts. “Since the Prime Minister announced demonetisation of old ~500 and ~1,000 notes on November 8 last year, the bank had opened a large number of savings accounts — especially till endDecember,” he said. The executive added, “Managing these accounts, including those with zero balance, involves expenses such as running operations and systems. It is also an effort to stem the outflow of money from savings accounts, especially those opened recently.”Turn

SBI is not alone. Private banks also charge a levy for non-maintenance of minimum balance.

For instance, HDFC Bank’s average monthly balance (AMB) requirement for a regular savings account is ~10,000 for metro or urban branches and ~5,000 for semi-urban branches. If the actual amount in the savings account is greater than or equal to ~7,500 but less than ~10,000, a levy of ~150 is charged; if it is greater than or equal to ~5,000 but less than ~7,500, there is a levy of ~300. There is no levy in semiurban areas.

If AMB is greater than or equal to ~2,500 but less than ~5,000, urban and metro customers are charged ~450 while semi-urban customers have to pay ~150. Likewise, if AMB is below ~2,500, customers in urban and metros have to pay a charge of ~600, while the same is ~300 for semi-urban. For rural branches, the average quarterly balance (AQB) is ~2,500 or fixed deposit of ~10,000 for a minimum of a-year-and-aday period is mandated. If AQB is lower than ~2,500 but equal to or more than ~1,000, the levy is ~270, while the same is ~450 if AQB is below ~1,000. Service tax and cess are also applicable.

The country’s top private banks such as HDFC Bank, ICICI Bank and Axis Bank have also taken steps to cover costs. In the past few days, they have re-introduced charges on cash transactions through branch walk-ins beyond a few free ones. SBI also charges customers for cash withdrawals at branches beyond certain free transactions, but these (typically ~50 per transaction plus service tax) are much lower than those of private banks.