Bank should inform the customer immediately on breaching minimum balance before charging the minimum balance charges – RBI notification

RBI
has issued a notification which makes the banks mandatory to inform the
customer immediately on the balance in the account breaching minimum balance
and the applicable penal charges for not maintaining the balance by way of SMS/Email/letter.
When the minimum balance is not maintained within one month from the date of notice of
shortfall, penal charges may be recovered from customer. This is really the
good step by RBI. In most of cases the customer comes to know about the minimum
balance when charges debited to his account. When bank inform the customer, then
he has option of restoring the minimum balance and can avoid the charges. These
guidelines will applicable from 1st April 2014.

The text of notification is
as below:

RBI/2014-15/308
DBR.Dir.BC.No.47/13.03.00/2014-15

November
20, 2014

All Scheduled Commercial
Banks,
(Excluding RRBs)

Dear
Sir/Madam

Levy of penal charges on non-maintenance of minimum balances in
savings bank accounts

Please
refer to our circular
DBOD.Dir.BC.53/13.10.00/2002-03 dated December 26, 2002 on
‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers,
in a transparent manner, regarding the requirement of minimum balance in
savings bank account and levy of penal charges for non-maintenance of the same
at the time of opening the account.

2.
In this connection, a reference is invited to paragraph 30 of Part B
of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1,
2014, regarding ‘Developmental and Regulatory Policies’ proposing certain
measures towards consumer protection. One of the proposals contained therein
was that 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 to Basic Savings Bank Deposit
Accounts and restore the services when the balances improve to the minimum
required level. A reference is also invited to the recommendations of Damodaran
Committee on customer service in banks which, inter-alia, recommended that ‘banks
should inform the customer immediately on the balance in the account breaching
minimum balance and the applicable penal charges for not maintaining the
balance by SMS/Email/letter. Further, the penal charges levied should be in
proportion to the shortfall observed’.

3.
The policy announcement has been reviewed after extensive consultation with
banks. Consequent to these deliberations and after taking into consideration
the recommendation of Damodaran Committee, it has been decided that while
levying charges for non-maintenance of minimum balance in savings bank account,
banks shall adhere to the additional guidelines given in Annex. The guidelines come into effect from April
1, 2015
.

4.
These guidelines should be brought to the notice of all customers apart from
being disclosed on the bank’s website.

5.
In the meantime, all banks are advised to take immediate steps to update
customer information so as to facilitate sending alerts through electronic
modes (SMSs/emails etc) for effective implementation of the guidelines.

Yours
faithfully

(Lily
Vadera)
Chief General Manager

Annex

Levy
of charges for non-maintenance of minimum balance in savings bank account shall
be subject to the following additional guidelines:

(i)
In the event of a default in maintenance of minimum balance/average minimum
balance as agreed to between the bank and customer, the bank should notify the
customer clearly by SMS/ email/ letter etc. that in the event of the minimum
balance not being restored in the account within a month from the date of
notice, penal charges will be applicable.

(ii)
In case the minimum balance is not restored within a reasonable period, which
shall not be less than one month from the date of notice of shortfall, penal
charges may be recovered under intimation to the account holder.

(iii)
The policy on penal charges to be so levied may be decided with the approval of
Board of the bank.

(iv)
The penal charges should be directly proportionate to the extent of shortfall
observed. In other words, the charges should be a fixed percentage levied on
the amount of difference between the actual balance maintained and the minimum
balance as agreed upon at the time of opening of account. A suitable slab
structure for recovery of charges may be finalized.

(v)
It should be ensured that such penal charges are reasonable and not out of line
with the average cost of providing the services.

(vi)
It should be ensured that the balance in the savings account does not turn into
negative balance solely on account of levy of charges for non-maintenance of
minimum balance.

 

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