SBI hikes minimum balance for savings account; others may follow

State Bank of India (SBI) has started charging more from its millions of account holders, including those of the 6 lenders merged with it this month, for not maintaining minimum balance as well as for services like cheque books and lockers.

The SBI decision to raise charges on various services is likely to be followed by other banks, hitting customers across the country.

These charges will also apply to customers of 5 erstwhile associates and Bharatiya Mahila Bank which have merged with State Bank of India effective April 1. With the merger, the SBI customer base has increased to 37 crore.

The monthly average balance (MAB) requirement has been increased to as high as Rs 5,000 for branches in six metros.

Savings bank account holders of SBI have to maintain the monthly balance or else they will invite a penalty ranging from Rs 20 (rural branches) to Rs 100 in (metro cities), according to SBI website.

Till March 31, the monthly average balance (MAB) for a savings bank account was Rs 500 without the facility of a chequebook and Rs 1,000 with chequebook across the country.

India's largest bank has now decided to fix separate MABs for 'metro', 'urban', 'semi-urban' and 'rural' areas from the beginning of next financial year.

The benchmark for MAB and penalties are likely to be followed by other public sector banks.

MAB for metro branches increased to Rs 5,000 and penalty for non-maintenance of minimum balance will be between Rs 50 and Rs 100. For urban and semi-urban branches, the MAB has been fixed at Rs 3,000 and Rs 2,000 respectively.

In case of rural branches, the minimum balance has been fixed at Rs 1,000. Breach of MAB will attract a penalty ranging between Rs 20 and Rs 50.

However, these new rates effective from April 1 are not applicable on Surabhi, Basic Savings Bank and PM Jan Dhan Yojana accounts.

Besides, the bank has increased locker rent and curtailed a number of free locker usage in a year. After usage 12 times, the customer has to pay Rs 100 plus service tax applicable for visiting his or her locker.

As far as cheque books are concerned, for a current account holder, the first 50 cheques free in a financial year; thereafter, it will cost Rs 3 per leaf.

So 25-leaf Cheque Book now costs Rs 75 plus service tax and 50-leaf Cheque Book cost is Rs 150 excluding service tax.

SBI will now charge Rs 20 for an opening fee including enrolment for savings account among other various charges that the bank has raised.

If one maintain 25,000 in your SBI savings account, then a customer can use ATM unlimited number of time. However, the charges of ATM usage over allowed 5 times will attract charges as prescribed by RBI.