The RBI has issued a directive that negative balance will not be imposed on saving accounts as penalty charges. The central bank has asked the banks to immediately stop imposing charges for not maintaining a minimum balance once the balance touches zero, reported Times of India.
The same norm came into effect last year, yet several banks were still continuing to impose negative balances in savings accounts until now. In case if banks still continue such practice, then the RBI has given the customers an option to approach the banking ombudsman.
What is negative balance?
When salary accounts are opened with a bank, the banks usually waive minimum balance requirements. However, if the customer quits his/her job, then the account does not remain salary account any more. Since there is no salary flow, the begins to debit an amount as penalty for not maintaining the minimum balance, which often results the balance to turn negative. This is called negative balance.
Although the banks do not look to recover funds from negative balance accounts, but the customer loses money if he/she deposits money in the account.
Banks like HDFC, ICICI, Axis have maintained to Times of India that they do not create negative balance.
The Logical Indian believes this will provide benefit for the customers and will result into creation of more bank accounts in India.