Our money is no longer ours. Banks will dictate how much we draw, how much we keep and whatever else we may want to do with our money in accounts. The move by the State Bank of India to fix higher Monthly Average Balance (MAB), drawals exceeding which would fetch penalties, is a baby step towards that.
SBI is reintroducing the penalty after a gap of five years. But the bank definitely needs to reconsider its decision as it affects 31 crore accounts. It is true that zero balance accounts are a drag on the resources of the bank, as these require to be maintained even when there is no real gain involved.
But penalising savings bank account holders who may out of constraints not be able to maintain a minimum balance is an insensitive move.
Currently, SBI has fixed a uniform MAB of Rs1,000 on accounts that have cheque book facility and Rs500 on those without. But with the new move, the lender has stated that it will be fixing limits and charging penalties differently for accounts based on the location of its branches.
For branches in metros, the bank is to fix Rs5,000 as the MAB and they will be penalized in the range of Rs50 to Rs100 if drawals breach the limit. The MAB for branches in urban, semi-urban and rural areas have been set at Rs3,000, Rs2,000 and Rs1,000 respectively. Penalties have also been fixed in proportion.
Although several private banks do have minimum balance requirements and penalties for non-maintenance of the balance, most are also better in terms of the services they provide such as ATMs. However, SBI beats them with its widespread network.
SBI appears to be trying to dam the outflow of funds that had come into accounts following demonetisation. But such a move by the biggest lender in the country, on which a large section of low- and middle-income groups depend, goes against the sheer basis for its patronage.
It is difficult for many account holders to maintain even a quarterly minimum balance considering the inflation of costs of different goods and services. And with the government going to increase the quantum of indirect taxes through the implementation of GST, there is bound to be much change in prices and greater strain on finances until the effects of GST are understood and moderated.
Against this backdrop, it would be difficult for most account holders running their lives on tight budgets to maintain the minimum balance.
Such a move also goes against simplification of banking, which is one of the biggest advantages that its digitisation has to offer. It is true that banks need to invest heavily in infrastructure, software and hardware to make its services available through various modes; but it is also equally true that they save much in other areas, such as manpower requirement for provision of services.
If banks such as the SBI are indeed in need of strengthening their position and hedging against collapse, they will have to start from the top down. They should focus on the big fish such as Adani and Ambani and not only on the much-publicized Vijay Mallya, and ensure that the crores they have borrowed are returned, if not with interest at least the principal.
Chief Justice JS Khehar made a very valid observation while hearing a case filed by the wife of Ch Eliah, a man who was arrested for theft of five sarees in Hyderabad and kept in prison for a year without trial. Khehar said: “A person who has taken away crores of rupees is enjoying life. But here a person who took five sarees is in jail.” The present action of the SBI appears to have parallels to the CJI’s observation. It is ignoring sharks and spearing minnows.
