Facing a backlash for levying penalty on non-maintenance of minimum balance in accounts, State Bank of India, the country's largest lender, 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 re-considering the penalty and it will take a call "if something comes". It also clarified the penalty would not apply to Jan Dhan accounts.
Applicable from April 1
Last week, the country's largest bank decided to reintroduce penalty on non-maintenance of minimum balance in accounts and also revised charges on other banking services.
The new charges would be applicable from April 1. The move by the state-run banking major has faced a lot of criticism, including from the opposition parties.
Arundhati Bhattacharya’s comment
"Today, we have lot of burden such 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," State Bank of India chairperson Arundhati Bhattacharya told PTI here on the sidelines of a national convention of women entrepreneurs.
As per the list of revised charges of SBI, failure to maintain monthly average balance (MAB) in accounts will attract a penalty of up to Rs. 100 plus service tax. In metropolitan areas, there will be a charge of Rs. 100 plus service tax, if the balance falls below 75 per cent of the monthly average balance of Rs. 5,000. If the shortfall is 50 per cent or less of the MAB, then the bank will charge Rs. 50 plus service tax. The charges and monthly average balance varies according to the location of the bank. It is minimum in case of rural branches.
Not applicable for Jan Dhan accounts
Ms Bhattacharya said that 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 also and State Bank of India was the only bank to withdraw it in 2012. "Our analysis have 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," Ms Bhattacharya said.
She clarified that the penalty on non-maintenance of minimum balance will not be applicable on Jan Dhan accounts.
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 State Bank of India 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 the public as bankers do not levy any charge on the customers." "There is some cost involved in printing cash, in transportation, counting and providing security to cash. The cost is borne by the tax payers. There is a cost in installing an ATM and so we feel the charges are very reasonable," Ms Bhattacharya said.
Use mobile banking
Ms Bhattacharya said the customers must use alternate channels like mobile, internet to do their transactions. "We do not see there is a requirement for a household person to withdraw cash through ATMs for more than four times. Daily cash requirement is more for people doing businesses and we want them to use mobile and internet banking to do transactions," she said.
Support for large segment
While addressing the convention, Ms Bhattacharya said the bank so far has given loan worth to Rs. 1,60,000 crore to the MSME sector. "This year alone we have done more than Rs. 10,000 crore. We wish to do around Rs. 16,000 crore of Mudra loans by the end of this financial year," she said. At present, nearly 55 per cent of the bank's balance sheet comprises retail segment and balance is to the large segment.
"I have no problem at all if I am able to tilt that more in favour of retail. I would love to do that. Of course, large segment needs support because of that you would have the airports ... the roads you have today, for defence you are going to set up an SME and for that you need steel, cement. "So, the large sector also needs support from the bank. But that does not mean that we (banks) are not there for you (retail segment)," she said.