Banks to levy penal charge on non-maintenance of minimum balance

Mumbai: The Reserve Bank on November 20 asked banks to inform their customers about fall in minimum balance well in advance and said that penal charges should be levied only to the extent of shortfall in such balances. The guidelines with respect to levying of penal charges for non-maintenance of minimum balance will come into effect from April 1, 2015.

"... it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, banks shall adhere to the additional guidelines," RBI said in a notification addressed to banks. As per detailed guidelines, RBI said the penal charges should be directly proportionate to the extent of shortfall observed.

"Charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalised," RBI said.

Further, in the event of a default in maintenance of minimum balance, the bank should notify the customer clearly by SMS/email/letter, giving them time period of one month to restore the balance so as to avoid penal charges. In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder, RBI said.

RBI further directed banks to ensure that such penal charges are reasonable and not out of line with the average cost of providing the services. Also, they should ensure that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance.

It also asked all banks to take immediate steps to update customer information so as to facilitate sending alerts through SMS or emails for effective implementation of the guidelines. The RBI guidelines are part of the RBI first bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014 regarding 'Developmental and Regulatory Policies' proposing certain measures towards consumer protection.

RBI said banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to basic savings bank deposit accounts and restore the services when the balances improve to the minimum required level.