Bhubaneswar: With the Reserve Bank of India not setting any criteria for the banks to follow vis-à-vis fixing the monthly average balance (MAB), the minimum balance amount to be maintained in a savings account varies from bank to bank.
In fact, the central bank, as a financial regulator, simply directed the banks to remind the customer before imposing the penalty for not maintaining the required MAB.
“At the time of opening an account, banks should inform their customers in a transparent manner the requirement of maintaining a minimum balance and levying of charges for failing to do so, etc… Any charge levied subsequently should be transparently made known to all depositors in advance with one month’s notice,” says the RBI’s Master Circular on Customer Service in Banks (RBI/2015-16/59 DBR No.Leg.BC. 21/09.07.006/2015-16), adding, “The banks should inform, at least one month in advance, the existing account holders of any change in the prescribed minimum balance and the charges that may be levied if the prescribed minimum balance is not maintained”. Notably, RBI in the same circular even allowed the board of the respective bank to fix their policy on penal charges.
Many economists suggest that RBI needs a standard system on MAB since the government is pushing more people to open bank accounts. For instance, during demonestisation, SBI opened about 50,000 accounts on a daily basis across the country.
“The banks cannot avoid penalty for not maintaining MAB themselves. But, currently neither the RBI nor the Centre has fixed any specific amount for MAB or penalty for defaulters. So, RBI, as a regulator, has to set a specific amount for MAB,” said eminent economist Santosh Kumar Mohapatra.
Jose K Joseph, OP
