PSB Triumph: Recovering Rs 35,000 Cr in Penalties Since 2018.


Public sector banks (PSBs) and five prominent private sector banks, namely Axis Bank, HDFC Bank, IndusInd Bank, ICICI Bank, and IDBI Bank, have collectively amassed a substantial sum of over Rs 35,000 crore in penalties since 2018. These penalties were imposed due to various reasons such as non-maintenance of minimum balance, extra ATM transactions, and SMS services, according to the Finance Ministry’s recent communication to the Rajya Sabha.


Dr Bhagwat Karad, the Minister of State, highlighted that within this group of banks, a significant chunk of more than Rs 21,000 crore was garnered due to customers failing to maintain the prescribed minimum balance. Additionally, an excess of Rs 8,000 crore resulted from additional ATM transactions, while SMS services contributed over Rs 6,000 crore.

The concept of adhering to a minimum balance, often termed as the average monthly balance (AMB), stands as a crucial prerequisite for numerous banks. This dictates that customers maintain a specific amount in their accounts each month. Failure to do so leads to the imposition of penalties by the banks.

Efforts by the government towards accessible banking services:

Minister Karad’s response underscored the collaborative efforts of the Government and the Reserve Bank of India (RBI) in ensuring the availability of affordable banking services to the economically disadvantaged sections of society.

The Basic Savings Bank Deposit Account (BSBDA), in line with the prevailing RBI guidelines, furnishes fundamental facilities. This extends to accounts opened under the Pradhan Mantri Jan Dhan Yojna (PMJDY), catering to the common populace free of cost and without any mandatory minimum balance requirement. The provided facilities encompass:

1. Deposits of cash at bank branches, ATMs, and Cash Deposit Machines (CDMs).
2. Receipt or credit of funds through electronic channels or deposits of cheques by Central or State Government agencies and departments.
3. No limitations on the number or value of deposits permissible in a month.
4. A minimum of four withdrawals every month, including ATM withdrawals.
5. Provision of an ATM Card or ATM-cum-Debit Card.

Furthermore, the RBI has issued a Master Circular dated 1st July 2015, titled “Customer Service in Banks,” that guides banks in setting penal charges for the non-maintenance of minimum balance in savings accounts. These charges should conform to the policies approved by the banks’ boards, and they must remain reasonable and proportionate to the cost of delivering such services, as directed by the Finance Ministry.

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