Levy of penal charges on non-maintenance of minimum balances in inoperative Accounts

RBI/2013-14/580
DBOD. Dir.BC.No. 109 /13.03.00/2013-14

May 6, 2014

All Scheduled Commercial Banks
(Excluding RRBs)

Dear Sir/Madam

Levy of penal charges on non-maintenance of minimum balances in inoperative Accounts

Please refer to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014, proposing certain measures towards consumer protection such as non-levy of penal charges for non-maintenance of minimum balance in any inoperative accounts.

2. In this connection, a reference is invited to our circular DBOD. Dir. BC. 53/ 13.10.00/ 2002-03 dated December 26, 2002 on ‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers regarding the requirement of minimum balance in savings bank account and levy of penal charges for non-maintenance of the same at the time of opening the account in a transparent manner.

3. Further, in terms of para 3 of our Circular DBOD. No. Leg. BC.35/09.07.005/2012-13 dated August 10, 2012 on ‘Financial Inclusion- Access to Banking Services - Basic Savings Bank Deposit Accounts’ it was advised to banks that no charge should be levied for non-operation/activation of Basic Savings Bank Deposit Accounts (BSBDAs).

4. It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account.

Yours faithfully,

(Prakash Chandra Sahoo)
Chief General Manager

_________________

Note: Circular DBOD. No. Leg. BC.35/09.07.005/2012-13 dated August 10, 2012  mentioned below:

RBI/2012-13/164
DBOD.No. Leg. BC.35/09.07.005/2012-13

August 10, 2012

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir,

Financial Inclusion- Access to Banking Services –
Basic Savings Bank Deposit Account

Please refer to paragraphs 88 and 89 of Monetary Policy Statement for the year 2012-13 announced on April 17, 2012.

2. Banks were advised in November 2005 to make available a basic banking 'no-frills' account either with 'nil' or very low minimum balance as well as charges that would make such accounts accessible to vast sections of population. With a view to doing away with the stigma associated with the nomenclature ‘no-frills’ account and making the basic banking facilities available in a more uniform manner across banking system, it has been decided to modify the guidelines on opening of basic banking ‘no-frills’ accounts. Accordingly, in supersession of instructions contained in circular DBOD.No.Leg.BC. 44/09.07.005/2005-06 dated November 11, 2005 on Financial Inclusion, banks are advised to offer a ‘Basic Savings Bank Deposit Account’ which will offer following minimum common facilities to all their customers:

i. The ‘Basic Savings Bank Deposit Account’ should be considered a normal banking service available to all.

ii. This account shall not have the requirement of any minimum balance.

iii. The services available in the account will include deposit and withdrawal of cash at bank branch as well as ATMs; receipt/credit of money through electronic payment channels or by means of deposit/collection of cheques drawn by Central/State Government agencies and departments;

iv. While there will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals; and

v. Facility of ATM card or ATM-cum-Debit Card;

3. The above facilities will be provided without any charges.  Further, no charge will be levied for non-operation/activation of in-operative ‘Basic Savings Bank Deposit Account’.

4. Banks would be free to evolve other requirements including pricing structure for additional value-added services beyond the stipulated basic minimum services on reasonable and transparent basis and applied in a non-discriminatory manner.

5. The ‘Basic Savings Bank Deposit Account’ would be subject to RBI instructions on Know Your Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to time. If such account is opened on the basis of simplified KYC norms, the account would additionally be treated as a ‘Small Account’ and would be subject to conditions stipulated for such accounts as indicated in paragraph 2.7 of Master Circular DBOD. AML. BC. No. 11/14.01.001/2012-13 dated July 02, 2012 on ‘KYC norms/AML standards/Combating of Financing of Terrorism (CFT) /Obligation of banks under PMLA, 2002’.

6. Holders of ‘Basic Savings Bank Deposit Account’ will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a ‘Basic Savings Bank Deposit Account’.

7. The existing basic banking ‘no-frills’ accounts should be converted to ‘Basic Savings Bank Deposit Account’ as per the instructions contained in para 2 above.

Yours faithfully

(Rajesh Verma)
Chief General Manager

____________________________

circular DBOD. Dir. BC. 53/ 13.10.00/ 2002-03 dated December 26, 2002 

Ref No. DBOD. Dir. BC. 53/13.10.00/2002-03

December 26, 2002

All Commercial Banks 
(excluding RRBs and LABs)

Dear Sir,

Minimum balance in savings bank accounts

Reserve Bank of India has not issued any guidelines regarding the minimum balance to be maintained in savings bank accounts. The banks have been prescribing the minimum balance to be maintained taking into consideration the cost involved in maintaining and servicing such accounts and also levying specific charges, if minimum balance is not maintained. There is, however, no uniform approach in this regard.

2. It has been reported to us that banks do not apprise the customers about the requirement of minimum balance at the time of opening of the accounts and also do not highlight the implication such as levying of charges etc. if the minimum balance is not maintained. Banks also do not ensure to inform the customers about any change in the minimum balance requirement.

3. We have had the matter reviewed and advise that henceforth banks should inform customers regarding the requirement of minimum balance at the time of opening the account in a transparent manner. Any subsequent changes in this regard should also be intimated to the account holders. The banks may decide the manner in which the information is made available to the customers.

4. Please acknowledge receipt.

Yours faithfully,

(R.C. Agrawal) 
General Manager