The government on Monday asked State Bank of India (SBI) to reconsider its decision to levy a penalty on non-maintenance of minimum balance, according to a person familiar with the matter.
Earlier in the day, SBI said it has decided to increase manifold the minimum balance required for maintaining savings accounts from April 1, impacting over 31 crore savings bank account holders, including pensioners and students. The penalty for breach of MAB is being reintroduced after a gap of five years.
The bank has increased the minimum balance requirement by much as Rs 5,000 for accounts maintained with branches in six metro cities.
Savings bank account holders of SBI and its five associates (merging with it on April 1) will 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).
As of now, monthly average balance (MAB) for a savings bank account is Rs 500 without the facility of cheque book and Rs 1,000 with a cheque book 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.
MAB for metro branches will be 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.
Cash Transaction Charges
The country's largest lender has also imposed restrictions on withdrawals of cash from its branches as well as automated teller machines (ATMs). These will attract charges after certain specified limits.
The government has urged SBI and other lenders, including private sector banks to reconsider the charges on cash transactions and ATM withdrawals above a certain limit, the person quoted above said.
Some private banks, like HDFC Bank, ICICI Bank and Axis Bank, have started charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.
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