In a new development, the Reserve Bank of India has passed a new ordinance according to which no penalty will be imposed upon customers who have lower than minimum account balance in their bank accounts.
This directive which has come as a relief for many customers is not doing well with the banks. This is because, the banks seems to believe that this move of removing the existing penalty could actually make banking services more expensive for the end user.
On the contrary, RBI believes that instead of imposing penalties on the users, banks should rather limit some of their facilities for those maintaining lower than minimum balance threshold in their bank accounts. They also said that these services could be rolled back any time as soon as the user improves the account balance to the minimum requirement.
RBI explained their point by saying, “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 basic savings bank deposit accounts and restore the services when the balances improve to the minimum required level.”
Justifying banks’ unacceptance, Aditya Puri, MD, HDFC Bank stated that, “The consumer will end up paying more. On the minimum balance of Rs. 10,000 we earn only Rs. 400 against which we provide ATM transactions, statement and chequebook. The break-even for providing these services is minimum balance of Rs. 30,000. The alternative is that we have to charge for these services as against the Rs. 400 we earn on minimum balance and the customer may end up paying more than the penalty if he regularly uses cheques and other services.
Apart from the aforementioned directive, RBI has also asked all the banks to offer their customers a basic savings bank deposit account which does not require a minimum balance. The initiative has been taken for the people who are unable to open bank accounts due to the requisite minimum balance.