How do the banks arrive at the minimum balance to be kept in the savings account?
Posted on: 14/Mar/2017 10:50:59 AM
Currently, there is a situation where the certain minimum amount is to kept in the bank balance in the saving account as the account holders face the problem of having to pay penalties up to Rs. 600.
There was indeed a period when the accounts holders did not have to worry at all about the balance in their savings accounts. However, one cannot afford to be like that in the present day circumstances.
The private sector banks have made it mandatory to keep a certain minimum balance in their savings account.
This is known as MAB (Minimum Account Balance).Now, there has been a great dissatisfaction among the common public that the largest public sector bank, the State Bank of India has also imposed similar conditions regarding the minimum amount in the account.
The State Bank of India put up an explanation that such a step was taken as a necessity following the Prime Minister’s Jandhan zero-balance accounts where crores of new accounts have been opened resulting in mounting expenses for the bank.
What is the penalty?
The banks divided the living places into different groups - depending on whether big cities, medium cities, smaller cities, Panchayat and rural area. According to this customers are categorized from their places and fixed the MAB. If MAB is low, the penalty is given as fixed in this categorization.
Generally the minimum balance amount (MAB) starts at Rs. 2500. Then further penalties are divided into slabs like Rs.2500 - Rs.5000, Rs.5000 - Rs.7500, Rs.7500 - Rs.10000, and so on. The penalty is fixed as per the slabs.
For the metro/urban accounts holders, this is fixed as Rs. 10000. In villages or rural areas, it is fixed at Rs. 1000.
HDFC Bank charges its urban account holders a maximum of Rs. 600 if MAB is not kept.
ICICI Bank charges a maximum of Rs. 450. Axis Bank charges Rs. 350. The State Bank of India charges a maximum of Rs. 100. In addition, 14% service charges, 0.5% Krishi Kalyan, and 0.5% Swatch Bharat are imposed.
State Bank of India has fixed MAB at Rs. 5000 for urban account holders. For other cities, it is Rs. 3000. For small cities, it is Rs. 2000. For villages/rural areas, it is Rs. 1000. The penalty ranges from Rs. 20 to Rs. 100 in SBI.
The banks have started sending SMS ore-mail to the account holders who have not maintained MAB. In case the account holder still fails to pay the penalty, it will be accrued. Whenever a deposit is made to that particular account, the accrued penalty amount will be deducted. Account holder still fails to pay the penalty, it will be accrued. Whenever a deposit is made to that particular account, the accrued penalty amount will be deducted.
However, the bank does not close the account. The redeeming feature is that, generally, no legal actions are taken. How is the monthly average calculated? For the account holders who have not kept the minimum MAB, the penalty is imposed on the last day of the month. This is based on the average balance kept in a month. How to calculate this?
At the end of every day, the balance will be taken for calculation purpose and will be counted for all the (30) days in the month. This will be totaled and divided by 30 (the number of days in a month) and this is the average.
For the Metro account holders, the penalty for not keeping MAB in ( MAB and Penalty) Rupees is - HDFC 10000, 150-600, SBI – 5000, 50-100, ICICI – 10000, 350-450, , and Axis Bank – 10000, 350 (In axis Bank, a penalty of maximum Rs. 350 is imposed for every Rs. 100 less than MAB).
