Your savings account will no longer have a negative balance: Report

RBI asks customers to approach banking ombudsman if banks impose penalty for not maintaining minimum balance, The Times of India reports

Have multiple savings accounts? Has your bank imposed penalties due to zero balance or no funds in the account? If the answers to the questions is a ‘yes’, then you need not be worried any more. 

As per a directive from the Reserve Bank of India (RBI), banks have been asked to stop imposing charges for non-maintenance of minimum balance once the balance touches zero, The Times of India reported. 

The central bank has also given the customers an option to approach the banking ombudsman in case lenders continue to debit charges on such accounts, creating a negative balance. 

In April 2015 too, the RBI had asked banks to give an advance notice to a customer before applying such charges. 

When does an account go in negative balance?

Usually, banks offer facilities like no minimum balance when a salary account is opened with them. 

However, when an individual changes his/her job this account stops getting continuous flow of funds,  banks start applying charges similar to savings accounts pushing the balance into negative zone. 

Do banks look to recover the funds from negative balance accounts?

Lenders do not pursue recovering the amount.  However, the customer fails to lose money if and when he/she deposits money in this account. 

In some cases, lenders have continued imposing this fine even after the central bank’s directive. The central bank’s directive to seek the ombudsman’s help intends to address this issue. 

Meanwhile, banks have maintained their stance that they do not impose penalties on negative balances.