Savings bank accounts are all about convenience. You just deposit money in the savings bank account and withdraw money whenever you need it. For you the savings bank account is your money box. You badly need money? Just go to the nearby ATM and withdraw cash from your savings bank account, using your debit card. Most of the time there is no money in your savings bank account. You fill this SB account as and when you earn some money.
Banks know that citizens like you do not have much money in your savings bank account. So….Many banks have offered you the zero balance facility, where you don’t need to keep/maintain a minimum balance in your savings bank account. For you savings bank account is literally your zero balance savings bank account.
Should banks impose a fine if you don’t maintain a minimum balance in your savings bank account? Let’s have a discussion. Want to learn more on savings bank accounts and fixed deposits? Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets.
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SBI has made it compulsory for you and other account holders to maintain a monthly average balance in your savings bank account. A penalty will be charged from April 1st 2017, if you do not maintain this monthly average balance. The monthly average balance is fixed at INR 5,000 for Metro cities and INR 3,000 in urban areas. It will be INR 2,000 in semi-urban areas and INR 1000 in rural areas.
Many Private Banks already have rules in place, where you need to maintain a minimum balance in your SB account. It won’t be long before many other banks soon follow this path.
1.Banks require money to maintain your savings bank accounts
Banks used to ask you and other citizens to maintain a minimum balance in your savings bank account. A fine would be charged if this was not followed. Many banks waived off this rule, to grab more customers.Banks wanted to grab customers and encourage them to open savings bank accounts with them. Savings bank accounts are low cost deposits. Most banks pay you just 4% interest a year, on your deposits in SB accounts. Banks then lend this money to you and other customers at much higher interest rates.
Even SBI, waived off minimum balance requirements on its savings bank accounts way back in July 2012. Now, banks may bring back minimum balance requirements in savings bank accounts and charge a fine if you don’t maintain the monthly average balance.
Banks say they will use the money they get in fines/charges, for the operating costs of maintaining savings bank accounts. Many new SB accounts were opened after demonetization. Even zero balance accounts opened under PMJDY have maintenance costs. So, banks might just be right in asking you to maintain a monthly average balance in your savings bank accounts.
2. You open too many savings bank accounts and leave them dormant
You and other citizens love opening savings bank accounts in different banks. You don’t use many of these SB accounts and don’t bother closing them. If you don’t transact using these savings bank accounts for more than 12 months, these SB accounts become inactive. If you don’t transact using these savings bank accounts for more than 24 months, they become dormant. Banks incur operating costs on these SB accounts.
If banks charge you a fine for not maintaining the monthly average balance on your savings bank accounts, you will think twice before opening a savings bank account you don’t really need.
So yes, the fine for not keeping minimum balance in SB accounts is justified. Banks have stood up and fought for their rights. It is your turn to be smart in handling your finances and make sure you maintain the monthly average balance in your savings bank account.
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