Penalty For Not Keeping Minimum Balance Will Help Bear Jan Dhan Costs, SBI Says

Facing a backlash for levying penalty on non-maintenance of minimum balance in accounts, SBI on Wednesday justified its move saying the bank needs to impose some charges to balance the "burden" of managing a large number of no-frills Jan Dhan accounts.

The bank also said it has not received any "formal communication" from the government for reconsidering the penalty and it will take a call "if something comes up". It also clarified that the penalty will not apply to Jan Dhan accounts.

Last week, the country's largest lender decided to reintroduce the penalty on non-maintenance of minimum balance in savings bank accounts and also revised charges on other banking services. The new charges would be applicable from April 1. The move by the state-run banking major has faced a lot of criticism, including from the opposition parties.

"Today, we have lot of burden such as we have 11 crore financial inclusion or Jan Dhan accounts. To manage such a large number of Jan Dhan accounts, we need some charges. We have considered many factors and after analysing carefully, we have taken this step," SBI Chairperson Arundhati Bhattacharya told reporters on the sidelines of a women entrepreneurs' national convention on Wednesday.

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As per the list of revised charges of SBI, failure to maintain monthly average balance (MAB) in accounts will attract penalty of up to Rs 100 plus service tax.

In metropolitan areas, there will be a charge of Rs 100 plus service tax if the balance falls below 75 percent of the MAB of Rs 5,000. If the shortfall is 50 percent or less of the MAB, then the bank will charge Rs 50 plus service tax. The charges and MAB varies according to the location of bank. It is minimum in case of rural branches.

All banks have minimum balance requirement for account holders, Bhattacharya said, adding that SBI has the lowest minimum balance requirement. SBI had withdrawn the penalty for not keeping a minimum balance in savings bank accounts in 2012.

"Our analysis have shown that most account holders maintain more than Rs 5,000 on a monthly basis and so they do not have to worry about any penalty," Bhattacharya said.

Asked about the government's direction to the bank to reconsider the decision, SBI's Managing Director Rajnish Kumar (National Banking) said the bank has not received any communication on this issue.

Under the revised charges, withdrawal of cash from ATMs will attract a charge of up to Rs 20 if the number of transactions exceeds three from other bank's ATMs in a month and Rs 10 for more than five withdrawals from SBI ATMs.

However, SBI will not levy any charge on withdrawals from its own ATMs if the balance exceeds Rs 25,000. In case of withdrawal by its customers from ATMs of other banks, there will be no charge if the balance exceeds Rs 1 lakh.

"We are charging as people go to ATMs, withdraw cash and give it to somebody who in turns deposits it into the bank. This type of transaction involves a cost which is not known to public as bankers do not levy any charge on the customers,” Bhattacharya said.

"There is some cost involved in printing cash, in transportation, counting and providing security to cash. The cost is borne by the tax payers. There is a cost in installing an ATM and so we feel the charges are very reasonable," she added.