News came out this week that the State Bank of India earned a whopping Rs. 1,772 crores in just minimum balance penalties from April 2017 to November 2017. 1,772 Crores! There are a few lessons that we must take away from this news item – the first is that Rs. 1,772 Crores is a very large amount of money even in the context of the banking business. The bank’s profits for the quarter of June to September 2017, in fact, was lesser. The second and more significant lesson is that this money wasn’t earned through the efforts of the bank’s employees. It was earned almost entirely from the lack of attention from their customers towards their banking transactions.
What We Know, What We Don’t
SBI hadn’t penalized its customers for not maintaining minimum balance in their account for over six years. They restarted this practice in April 2017 for their regular Savings Bank accounts, which excluded the Prime Minister’s Jan Dhan Yojana Accounts, their ‘basic’ savings bank accounts and savings bank accounts held by pensioners, minors and social beneficiary accounts. The fines, which started out between Rs. 50/- to Rs. 100/- a month were then revised to be between Rs. 30/- to Rs. 50/- a month.
The moment you open a bank account in any bank, you are informed of the ‘minimum balance’ rule, that is, the amount of money you should compulsorily maintain in your bank account at any given time. Assuming that customers weren’t aware of the penalty the first time, doesn’t it surprise you that they didn’t act on the fine after it was charged the first time? They could have either increased balance, or closed the account. But given the magnitude of the bank’s earnings through Minimum Account Balance penalties, it is clear that they did neither.
Banks and financial institutions charge us for a number of services and it is entirely likely that we are availing them without being entirely aware of their costs. Take credit cards for instance – if you accept a credit card but don’t use it, the bank can and will charge you some kind of ‘maintenance’ fee every year. It’s possible that you weren’t even informed of these charges! Similarly, you might have unknowingly forked out money for debit card maintenance, shopping on a website that uses an international currency or a duplicate bank statement. The charges might seem minor, but it won’t be long before they start building up.
While some charges can’t be prevented, it is of paramount importance that we stay alert and aware of what is happening in our bank accounts. So often I see intelligent women who are so up-to-date on everything except the goings-on of their bank accounts, because they are so resistant to the idea of ‘bank work’. Some regard it mundane and boring, and some others are actually fearful of going through numbers because they’ve preconceived notions that bank statements are difficult to understand. As a result, they end up losing money when they could have prevented the situation from happening in the first place.
Sign Up for Updates
If you’re someone who loathes the idea of bank work, let me assure you that it gets easier with each time that you look into your statement. It’s important to get comfortable with your financial history and make the best use of the tools at your disposal to ensure that you don’t lose money unnecessarily. If your bank has the facilities to provide mobile and email updates, sign up for them. Activate internet banking services and check your statement every week to stay on top of your transactions. If you see a charge that you don’t understand, don’t hesitate to call your banker and ask them about it. You might even find out that some of them are reversible. If you have more than one bank account and you find that you aren’t operating one as much as you should, close the account and transfer the balance to the account you use regularly. These are small efforts that make a big difference, after all, every rupee that you have earned is a result of your hard work. Why let it slip?