The State Bank of India waived off the minimum balance that had to be maintained by all savings account holders. This Average Monthly Balance for savings accounts was at Rs 3,000 for metros, Rs 2,000 for semi-urban areas and Rs 1,000 for rural areas. Those who did not maintain the minimum balance were earlier fined Rs 5 to Rs 15, plus taxes.
The latest announcement comes as a relief to 44.51 crore savings account holders with India’s largest lender. In a statement, SBI said that this will “boost the efforts to promote financial inclusion”.
In addition to this, the bank also scrapped SMS charges, which it levied every quarter.
SBI also rationalised interest rates on savings accounts to a flat 3%. Currently, the interest rate on savings bank accounts is 3.25% for deposits up to Rs 1 lakh, and 3% for deposits above Rs 1 lakh.
SBI had scrapped the minimum balance requirement in 2012 and reintroduced it in April 2017. They faced flak for high penalties, which ranged from Rs 20 to Rs 100. This was subsequently reduced.
In the financial year 2017-18, SBI collected over Rs 2,400 crore in penalties due to non-maintenance of minimum balance. “For April 2017, the SBI recovered Rs 2.35 billion as penalty from only 38.9 million of the 255 million savings bank accounts in question for not maintaining minimum monthly average balance,” a report by a professor at Indian Institute of Technology (IIT) Bombay said.
In July 2019, Minister of State for Finance Anurag Thakur informed the Lok Sabha that in the previous three years, savings account holders paid nearly Rs 10,000 crore in penalties for not maintaining the minimum balance, of which Rs 6,155 crore was collected by public sector banks.