SBI to charge for breaching monthly average balance in saving accounts

Penalty back after 4 years; max levy: Rs 100 plus service tax; bank to cut interest on certain FDs

Come April 1, and the State Bank of India will once again begin to charge customers for failing to maintain the monthly average balance (MAB) in their savings bank accounts. The bank done away with this rule in July 2012 to expand customer base.

The country's largest lender will levy charges to partly cover costs incurred for managing systems and operations for saving bank accounts. The charge is linked to the gap between the amount held in an account and the MAB required to be maintained in it.

According to an SBI communication to branches, the monthly average balance that customers will have to maintain in savings bank accounts with branch in metropolitan areas is Rs 5,000.

If the shortfall -- the gap between amount in account and Rs 5,000 (MAB in metropolitan region) is 50 per cent or less, then SBI will levy a charge of Rs 50 plus service tax. For shortfalls between 50-75 per cent, the penalty will be Rs 75 plus service tax and for gaps above 75 per cent, the charge is Rs 100 plus service tax.

For rural areas the MAB is much lower at Rs 1,000 and the levy charged for failing to maintain a certain balance is also low.
 
Senior SBI executive said the bank currently has about 250 million savings accounts.

Banks opened a large number of accounts after demonetisation especially between November 10 and December 2016. Managing these accounts, including those with zero balance, involves expenses to run operations and systems. It is also an effort to stem the outflow of money from savings accounts, especially those opened in the recent past, the executive added.   

In 2012, SBI had done away with the penalty in order to attract new customers. The move was also aimed to help the bank generate low-cost deposits as the savings bank account earned just four per cent interest.

Meanwhile Rajnish Kumar, Managing Director, (National Banking Group) at SBI, said the bank has reduced interest rates on term deposits by up to 25 basis points in certain maturity buckets in the current month (March). SBI’s rates in certain maturity buckets were higher than prevailing market rates.

The bank is in a comfortable position as far as resources are concerned, due to a surge in the flow of money into savings bank accounts after demonetisation.

Ruling out a revision in lending rates for now, Kumar said the rates would remain stable. There was little room left for change after sharp 90 basis point cut in Marginal Cost of Funds based Lending Rate (MCLR) in January 2017.