Indian banks pocket Rs50b in low balance penalties

Government-owned SBI took nearly half the sum

As many as 21 public sector banks and three major private sector lenders collected Rs50 billion (Dh2.68 billion) from customers for non-maintenance of minimum balances in their accounts in 2017-18, according to banking data. India’s largest lender State Bank of India, which suffered a staggering net loss of Rs65.47 billion during 2017-18, led the pack in penalising its customers for not maintaining minimum balances.

The government-owned SBI, which re-introduced the penalty on deposits going below monthly average balance basis from April 2017, collected nearly half the amount raised by the 24 banks put together (Rs49.89 billion).

But for the additional income of Rs24.33 billion under this head, SBI’s losses would have soared further.

After SBI, the largest amount of charges for not maintaining minimum balances in 2017-18 was levied by HDFC Bank. It charged its customers Rs5.9 billion, which is lower than the Rs6.19 billion it collected in 2016-17. Axis Bank collected Rs5.30 billion in the last fiscal while ICICI Bank charged Rs3.17 billion.

Reinstated charge

SBI had been charging the penalty on failure to maintain monthly average balance requirement till 2012 and again re-introduced it from April 1, 2017. Following public criticism, SBI reduced charges with effect from October 1, 2017.