September 14th, 2017
Students of a municipal school in Chembur have lost all their saved money in the last two years due to the State Bank of India’s latest monthly average balance rule, the Mumbai Mirror reported.
The SBI, which has made it mandatory for all account-holders to maintain a minimum balance of Rs 5,000 every month in metro cities, has made penalty deductions from the accounts of around 100 students Ayodhya Nagar Municipal School in Chembur.
Two years ago, the school authorities had urged the students to open bank accounts with the SBI claiming that it would enable them to have basic knowledge about banking techniques. Being a public sector bank, SBI was the preferred choice for the school, especially because it didn’t have a monthly minimum balance rule.
Bibhisan Shinde, a teacher from the school, had encouraged the students in this initiative. Speaking to the Mumbai Mirror, he said, “A lot of students apply for scholarships, and we thought it would benefit them if the money were deposited directly in their accounts. Besides, how else will these slum kids get to learn the basics of banking? That is why I approached the local SBI branch, and they were quite cooperative. Together, we created accounts for around 200 students but see what has happened now.”
After the incident, Shinde felt about urging the students to open up an account and hence had apologised to them personally.
However, the scheme has backfired considering the latest norm that has been put out by the SBI of a minimum balance of Rs 5,000 in metro cities. The unfortunate part of the situation is the fact that the students of the school hail from financially backward families and the monetary loss are sure to hit them hard.
The parents and the students are equally dejected with the fact that their accounts have run in zero balance without any prior knowledge to them.
The Mumbai Mirror had visited the SBI’s Mahul Road branch. Branch manager, B. N. Mishra confirmed that a lot of customers had come to them with the same complaint. Another bank official admitted that those from financially weaker backgrounds had received the worst blow.
The officials further suggested that those from financially backward backgrounds can open new accounts under the Jan Dhan Yojana. The minimum balance rule does not apply in that scheme.
The bank will not levy any more penalty if the customer is closing the account.
Banks have been increasing the penalty and other charges on customers – because the RBI’s regulations give them a free hand to do so. They do not require the permission of the RBI to levy fines on customers.
The All India Reserve Bank Employees Association (AIRBEA) is seeking RBI Governor’s intervention on charges and penalty levied by State Bank of India (SBI) on the account holder.
For savings bank accounts held in metro branches, the required minimum average monthly balance is Rs 5,000, and if the amount falls below Rs 3,750, SBI levies a penalty of Rs 100 plus service tax. The charges and minimum account balance vary across metro, urban, semi-urban and rural areas. According to reports, during the June 2017 quarter, SBI had earned Rs 235 crore only from such fines, which goes directly to its net profit.
With RBI’s staff now raising the issue of unfair charges levied by SBI, it is high time that the regulator wakes up to ground level reality and take necessary action against such practices.
The Logical Indian community urges the concerned authorities to look into the matter and ensure that the grievance of the families is taken care of in the soonest possible way.
An online petition in this regard has garnered more than two lakh signatures. (Sign the Petition). One of the key points of the petition is about unreasonable and unfair bank charges.
The full article can be read here: KIDS PENNILESS AFTER MINIMUM BALANCE RULE