State Bank of India (SBI) on Wednesday justified levying penalty on non-maintenance of minimum balance in savings bank accounts, saying the bank needs to impose some charges to balance the “burden” of managing a large number of no-frills Jan Dhan accounts.
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SBI chairman Arundhati Bhattacharya said the proposal to charge cash transactions and penalty on not maintaining a minimum balance will subsidise financial inclusion accounts including those under PM’s Jan Dhan Yojna.”SBI’s requirement for minimum balance is lowest among all banks. SBI was the only bank that didn’t have this as we have removed it in 2012. We have 11 crore financial inclusion accounts and have to manage them as well,” Bhattacharya said.
According to the SBI chairman, there are costs attached to handling, maintaining, transporting, counting, security and recycling. “It is paid by the taxpayers. And the more cash is used, the more obstacles in inclusion,” the SBI chief said.
“Our analysis have shown that most of the account holders maintain more than Rs 5,000 on a monthly basis and so they do not have to worry about any penalty,” Bhattacharya said. The penalty will not be applicable on Jan Dhan accounts, she said.
On reports that the government had urged SBI to reconsider the charges on minimum balance and also other lenders, including private banks, Rajnish Kumar, managing director (national banking) at SBI, said that there has been no formal communication from the government to review the charges. If a formal communication comes, Kumar said: “We will see. Every product is reviewed but this has to be looked at from a certain perspective.”
Under the revised charges, cash withdrawal from ATMs will attract a Rs 20 charge if the number of transactions exceeds three from other bank’s ATMs in a month and Rs 10 for more than five withdrawals from SBI ATMs. However, SBI will not levy any charge on withdrawals from its own ATMs if the balance exceeds Rs 25,000. In case of withdrawal from ATMs of other banks, there will be no charge if the balance exceeds Rs 1 lakh.
“We are charging as people go to ATMs, withdraw cash and give it to somebody who in turn deposits it into the bank. This type of transaction involves a cost which is not known to public as bankers do not levy any charge on the customers. There is some cost involved in printing cash, in transportation, counting and providing security to cash. The cost is borne by the tax payers. There is a cost in installing an ATM and so we feel the charges are very reasonable,” Bhattacharya said.
Last week, SBI imposed service charge for failure in maintaining monthly average balance (MAB) in metro, urban and rural centres. For metro, failure to meet Rs 5,000 balance will attract Rs 50 charge for 50 per cent shortfall,
Rs 75 for shortfall between 50-75 per cent and Rs 100 for 75 per cent or more shortfall. In the case of urban centres, failure to meet
Rs 3000 MAB will attract Rs 40 service charge, Rs 60 for 50-75 per cent shortfall and Rs 80 for 75 per cent or more shortfall.
SBI has also announced charges for issuing cheque books, cheque collection, stop payments, issuing certificates, bill collection and NEFT and RTGS charges. It has also revised charges for currenct accounts as well. For debit cards, SBI will charge an annual maintenance fee of Rs 125-300 depending on the category of the card. The number of free ATM transactions will be three in metros and five in other centres.
On March 1, in a move aimed at discouraging cash transactions, HDFC Bank, ICICI Bank and Axis Bank have started charging a specific transaction amount after a certain limit in the case of cash transactions. However, public sector banks, including market leader State bank of India, are yet to announce any charges on cash transactions.