Govt Asks SBI, Other Banks to Reconsider Charges on Transactions

Kumar will replace current chairman Arundhati Bhattacharya.

The Centre on Monday asked HDFC Bank, ICICI Bank and Axis Bank to reconsider the charges they levied on cash transactions and ATM withdrawals.

From 2 March, these banks began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals, beyond four free transactions in a month.

The government also asked SBI to reconsider its decision of imposing a penalty on non-maintenance of minimum balance in accounts from 1 April.

State Bank of India had decided to increase manifold, the minimum balance required for maintaining savings account from 1 April, hitting 31 crore depositors including pensioners and students.

The monthly average balance (MAB) requirement has been increased to as high as Rs 5,000 for branches in six metros.

Also Read: HDFC, ICICI, Axis Bank to Levy Rs 150 After 4 Cash Transactions

Savings bank account holders of SBI and its five associates (merging with it on 1 April) 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). SBI has 31 crore savings bank accounts.

As of now, monthly average balance (MAB) for a savings bank account is Rs 500 without facility of cheque book, and Rs 1,000 with 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 financial year 2017-2018.

The benchmark for MAB and penalties are likely to be followed by other public sector banks.

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.

Five associates banks of SBI – State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) – will merge with the parent on 1 April.

With the merger of all the five associates, SBI is expected to become a lender of global proportions with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over USD 555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.