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Bank of Baroda doubles minimum balance for savings account

For metro, urban and semi-urban branches, the bank has doubled the minimum quarterly average balance.

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Bank of Baroda (BoB) will be increasing the minimum quarterly average balance (QAB) that has to be maintained on its advantage savings account that offers its customers an overdraft facility from February 1, 2019. However, there is no change for customers who hold the saving accounts with the bank.

For metro, urban and semi-urban branches, the bank has doubled the minimum quarterly average balance.

The minimum quarterly average balance for BoB advantage savings accounts with urban and metro will be increased from Rs 1,000 to Rs 2,000 and for advantage savings accounts with semi-urban branches, the minimum balance will be widened from existing Rs 500 to Rs 1,000. There is no change for such accounts in its rural branches, where the minimum quarterly balance will continue to be Rs 500.

State Bank of India (SBI) was the first public sector bank to increase the minimum balance requirements. Other banks are likely to follow suit as a strategy to boost revenues and have low cost deposits.

The interest rates on savings bank account for most of the larger banks is 3.5 per cent.

Jawahar Karnavat, head of liabilities and deposit resource mobilisation, BoB, said in an email response to DNA Money that the minimum balance requirement was last revised by the bank two decades ago. "The cost of funds, along with investment in technology for seamless banking experience, has led to the revision."

"Only 16 per cent of total saving bank customer base will come under this revision as its applicable only to accounts of customers held under Baroda Advantage savings account. Customers who are maintaining other variants of saving account (14 variants) and the saving bank scheme under financial inclusion and social schemes will not be impacted by this revision," Karnavat added.

The bank has not changed the penal amount for non-maintenance of minimum QAB. Only the slabs have been changed. The maximum charges for non-maintenance of minimum QAB are at present Rs 200 for metro and urban branches. Failing to maintain QAB for semi-urban and rural branches will be Rs 100.

Savings accounts form 34 per cent of the total deposit base of the bank and retail term deposits constitute 46 per cent of the deposit base of the bank, with the remaining 20 per cent being bulk deposits.

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