ADVERTISEMENTREMOVE AD

SBI Defends Penalty as Means to Bear Jan Dhan Costs

The move by the state-run banking major has faced a lot of criticism, including from the opposition parties.

Published
Business
3 min read
story-hero-img
i
Aa
Aa
Small
Aa
Medium
Aa
Large
Hindi Female

Facing a backlash for levying penalty on non-maintenance of minimum balance in accounts, SBI on Wednesday justified its move, saying the bank needs to impose some charges to balance the "burden" of managing a large number of no-frills Jan Dhan accounts.

The bank also said it has not received any "formal communication" from the government for reconsidering the penalty, and it will take a call "if something comes up". It also clarified the penalty would not apply to Jan Dhan accounts.

Last week, the country's largest lender decided to reintroduce penalty on non-maintenance of minimum balance in accounts, and also revised charges on other banking services.

ADVERTISEMENTREMOVE AD

The new charges would be applicable from 1 April. The move by the state-run banking major has faced a lot of criticism, including from the opposition parties.

Today, we have a lot of burden as we have 11 crore financial inclusion or Jan Dhan accounts. To manage such a large number of Jan Dhan accounts, we need some charges. We have considered many factors, and after analysing carefully, we have taken this step.
Arundhati Bhattacharya, Chairperson, SBI

As per the list of revised charges of SBI, failure to maintain Monthly Average Balance (MAB) in accounts will attract penalty of up to Rs 100 plus service tax.

0

In metropolitan areas, there will be a charge of Rs 100 plus service tax, if the balance falls below 75 percent of the MAB of Rs 5,000. If the shortfall is 50 percent or less of the MAB, then the bank will charge Rs 50 plus service tax.

The charges and MAB varies according to the location of bank. It is minimum in case of rural branches.

Bhattacharya said all the banks have minimum balance requirement for account holders and SBI as such has the lowest minimum balance requirement. She said the penalty was there earlier as well and SBI was the only bank to withdraw it in 2012.

ADVERTISEMENTREMOVE AD
“Our analysis has shown that most of the account holders maintain more than Rs 5,000 on a monthly basis, and so, they do not have to worry about any penalty,” Bhattacharya said. She clarified that the penalty on non-maintenance of minimum balance will not be applicable on Jan Dhan accounts.

When asked about the government's direction to the bank to reconsider the decision, SBI's Managing Director Rajnish Kumar (National Banking) said the bank has not received any communication on this issue.

"There is no formal communication. We will see if something comes up," Kumar said.

ADVERTISEMENTREMOVE AD

Under the revised charges, withdrawal of cash from ATMs will attract a charge of up to Rs 20 if the number of transactions exceeds three from other bank's ATMs in a month, and Rs 10 for more than five withdrawals from SBI ATMs.

However, SBI will not levy any charge on withdrawals from its own ATMs if the balance exceeds Rs 25,000. In case of withdrawal by its customers from ATMs of other banks, there will be no charge if the balance exceeds Rs 1 lakh.

"We are charging as people go to ATMs, withdraw cash and give it to somebody who in turns deposit it into the bank.

This type of transaction involves a cost which is not known to public as bankers do not levy any charge on the customers.

(With inputs from PTI.)

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

Read Latest News and Breaking News at The Quint, browse for more from news and business

Topics:  SBI   Penalty 

Speaking truth to power requires allies like you.
Become a Member
3 months
12 months
12 months
Check Member Benefits
Read More
×
×