Pay up to Rs 600 plus taxes for not maintaining min bank balance

Banks will wipe out balances in your savings account if you don't maintain a monthly average balance (MAB).

Penalties are also no more mild, moving up to as high as Rs 600 plus taxes in case of some private banks and as high as Rs 100 in the case of India's largest public sector bank, SBI.

For HDFC Bank penalties can be high as Rs 600 plus taxes, ICICI Bank the penalty can go up to Rs 450, for Axis Bank Rs 350 and for SBI it can go up to Rs 100. All these charges will have an additional cost of 14% service tax, 0.5% Krishi Kalyan cess and 0.5% Swachh Bharat cess.

The penalties are all slab-wise, lower the MAB, steeper the penalty for the customers. For metro customers of HDFC Bank, if the MAB falls to zero to Rs 2,500, the penalty in a month will be Rs 600. If the balance falls to Rs 2,500 to Rs 5,000, the penalty will be Rs 450 plus taxes and cess. And if the minimum balance falls to Rs 5,000 to Rs 7,500, then the penalty will be Rs 300, and if the minimum balance is between Rs 7500 but less than Rs 10,000, the monthly penalty will be Rs 150.

While ICICI Bank revised the rates effective June 2016, according to its website, Axis said it has not revised the rates in the recent past but did not give an exact date from when the new rates are effective. HDFC Bank did not respond to a questionnaire as to when the new rates are effective.

Banks have lower rates of penalty for rural customers and the minimum quarterly balance is taken into account, but still rates are high.

The minimum quarterly balance (MQB) of the HDFC Bank customers is Rs 2,500. If the quarterly balance is falls to between Rs 1,000 to less than Rs 2,500 the penalty is Rs 270 and if the average quarterly balance is less than Rs 1000 the penalty is Rs 400.

Rajnish Kumar, managing director, State Bank of India (SBI), told DNA Money, "We open about four crore accounts annually and there is a cost of maintaining these accounts. Many accounts are also superfluous, means one person opening multiple accounts without transacting. So these charges are discouraging these practices and forcing people to maintain a minimum saving in their account. Of the 31 crore savings bank accounts, the bank has 10 crore financial inclusion and Jan Dhan accounts where the charges are not applicable."

In SBI, MAB for metro customers is Rs 5,000 and penalty can range between Rs 50 and Rs 100, for urban customers, it is Rs 3,000 and penalty can range from Rs 40 to Rs 80 and for semi-urban customers, the MAB is Rs 2,000 and the penalties range from Rs 25 to Rs 75. For rural customers of the bank, the MAB is Rs 1,000 and the penalties are between Rs 20 to Rs 50.

For ICICI Bank, the penalties for metro customers vary from Rs 350 to Rs 450 plus taxes for failing to maintain MAB of Rs 10,000. If the minimum balance falls below Rs 5,000 in a month then the penalty is Rs 450 and if the balance is above Rs 5,000 but less than Rs 10,000 then the penalty Rs 350.

The MAB for semi-urban customers is Rs 5,000. If MAB shortfall ranges from Rs 2,500 to Rs 5,000 then the charge is Rs 300 and if the balance falls to below Rs 2,500 the penalty will be Rs 400. For rural customers, the MAB is Rs 2,000 and the penalties range between Rs 250 and Rs 300

ICICI website states that in the event of non-maintenance of MAB, the bank will notify the customer by SMS/e-mail/ letter etc that in the event of the minimum balance not being restored in the account in the subsequent month, non-maintenance of MAB charges will be applicable.

In case the customer has not maintained MAB for any consecutive month, non-maintenance of MAB charges shall be applicable for all consecutive months. The bank will notify the customer in the initial month only in case of non-maintenance of MAB in consecutive months

For Axis Bank, the penalty for metro customers is Rs 350 plus taxes for not maintaining a monthly balance of Rs 10,000, or Rs 10 per Rs 100 shortfall, whichever is lower. For its rural and semi-urban customers the penalty is Rs 250, but for the rural customers, the bank requires its customers to maintain the half-yearly balance of Rs 2,500 or have a total relationship value of Rs 25,000.

Axis Bank in an emailed response said, "In case a customer has not maintained desired average monthly balance a requisite cautionary notice of 30 days is sent to the customers and subsequent to the notice if the customer still does not maintain balance again then the penalty is imposed.