The Reserve Bank of India has asked banks not to penalize account holders for not maintaining minimum balance. The banking regulator had announced its intention in a recent policy statement. “It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account,” RBI told in a circular issued to all commercial banks.
The central bank had said that it proposes to frame comprehensive consumer protection regulations based on domestic experience and global best practices in its annual policy statement in April. “Banks should also not take undue advantage of customer difficulty or inattention,” said the governor’s policy statement.
Banks should limit services available on such accounts to those available to basic savings bank deposit accounts Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts. But they should restore the services when the balances improve to the minimum required level.” Basic savings bank deposit accounts are those that banks have mandated to offer without any minimum balance requirement. But such accounts can be used only for cash deposit and withdrawal; there are no other services such as cheque books. The central bank had also said that banks should limit the liability of customers in electronic banking transactions in cases where banks are not able to prove customer negligence. It also said that banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Some public sector banks such as the State Bank of India and IDBI Bank among others have requirement of maintaining minimum balances in savings bank accounts.
Among the many other initiatives, RBI has also directed banks to calculate interest rate paid on savings banks on the daily minimum balance.