If you live in metro cities areas and hold a savings bank account with a private bank, you are required to maintain minimum monthly / quarterly balance of Rs 10,000 in most cases. If you fail to satisfy the minimum balance requirement, you are charged some penalty which is Rs 250 per month with some major private sector banks. On the other hand, public sector banks keep a moderate or no minimum balance requirement. State bank of India, in July 2012 had waived off minimum balance requirement on savings bank account to attract new customers. Most of other public sector banks have a minimum monthly / quarterly balance requirement of Rs 1,000 and charge you Rs 100 for not maintaining the same. As a part of a bigger initiative of protecting consumers, RBI, in its first bi-monthly monetary policy, proposed that banks should do away with minimum balance requirement in ordinary savings bank account and inoperative accounts. The central bank has also suggested that, until account holders do not comply with the minimum balance requirement, services to these accounts can be restricted.

Would banking customers benefit?
If the proposal becomes a norm, customers would get an access to money which otherwise would have been locked. However, there is a possibility that banks will charge fee for provided services which are currently rendered as value added services. Banks provide cheque book (with a limit on number of cheques) and pass book facility free of cost. ATM transactions using the ATM centers of the same bank are free of cost, but when performed using other ATMs, first 5 transactions are also free of charge. In case banks withdraw the minimum balance requirement, they, especially private banks, may find it difficult to continue providing aforesaid services free of cost. Unless a customer maintains minimum balance in the saving bank account, cost of funds to the bank goes up. Furthermore, maintaining dormant accounts with lower than minimum required balances, would also add to the cost to banks as customers may become less keen on closing these accounts.

PersonalFN is of the view that, those who are concerned with requirement of maintaining higher balance in the savings bank account with private banks, have multiple options at present. They might either opt for Basic Savings Bank Deposit Account or open a bank account with a nationalized bank having lower minimum balance requirement. RBI monetary policy statement for the year 2012-13 dated April 17, 2012 directed banks to offer savings bank deposit account having a ‘zero balance’ facility along with providing some minimum common facilities to customers. Such accounts are known as Basic Savings Bank Deposit Accounts. If the proposal of RBI of not keeping any minimum balance requirement is accepted, it may make also those customers pay for services who regularly maintain account balances.

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