New Delhi: Despite State Bank of India’s decision to waive penalties for minimum balance requirements, other public sector banks have seen a significant increase of over 35% in collections under this head over the past five years. Data presented as part of written response to un-starred question in the Lok Sabha reveals that these banks collected around Rs 8,500 crore in penalties over the past five years starting from FY20, The Hindu Businessline reported.
The 11 public sector banks have varying mechanisms for collecting penalties, with Punjab National Bank, Bank of Baroda, Bank of India, Punjab & Sind Bank, Union Bank of India Bank and UCO Bank levying charges for not maintaining a minimum Quarterly Average Balance (QAB) and others like Indian Bank, Canara Bank, Bank of Maharashtra and Central Bank of India levying penalty for not maintaining an Average Monthly Balance (AMB).
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The penalties range from Rs 25 to Rs 600, depending on the bank and the customer’s location.
Minister of State for Finance, Pankaj Chaudhary, emphasised the importance of transparency in these practices. He stated that banks must inform customers of the minimum balance requirements when opening an account and notify them of any changes.
If the minimum balance is not maintained, banks should alert customers to the penal charges, applicable if not rectified within one month, and ensure that savings accounts do not turn into negative balances solely due to these charges, he underlined.
“It should be ensured that savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance,” Chaudhary was quoted as saying by Businessline.
