The India’s Central Banking Institution, RBI (Reserve Bank of India) has given the guidelines for levy of penal charges on non-maintenance of minimum balances in savings bank accounts by the customers. These guidelines are a part of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection.
RBI said, “In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder.”
RBI has advised banks-
- To keep the customers notified in advance about reduction in minimum balance via SMS/ letter/ e-mail etc.
- If the customer does not restore the minimum balance within given period of time, then the penal charges may be recovered by the bank on intimating the account holder.
- The penal charges policy must be approved by the Board of the bank.
- Penal charges should be levied only in proportion to the extent of shortfall observed in such balances.
- Penal charges levied should be reasonable.
- Bank should ensure that the savings account’s balance does not turn into negative balance.
“The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized.,” RBI said.
The bank must inform the account holders about fall in minimum balance. Thus, if a customer is falling short of minimum balance, then the bank must inform the customer through letter, e-mail or SMS to restore the minimum balance failing to which the customer will be levied upon with penal charges.
These guidelines will come into effect from April 1, 2015. RBI has asked the banks to display these guidelines on the bank’s website as well as the bank must bring these guidelines to the notice of customer through e-mails, SMS’s, letters etc. for their effective implementation.
Also Read- Other RBI Guidelines