PSBs Drop Charges on Minimum Balance Breach to Retain Savers

In the face of decadal-low savings rates, state-run banks are hoping that dropping charges for not maintaining a minimum balance will help hold customers' interest in bank deposits.

- Shayan Ghosh & Anshika Kayastha

The decision, said two bankers close to the matter, follows a regulatory push to address customer grievances, as well as internal surveys that estimated limited revenue loss if such minimum balances are not maintained.

"The Reserve Bank of India wanted us to look into complaints, and this was one of the major areas. We therefore decided to stop minimum balance charges," said the first of the two bankers, both of whom spoke on the condition of anonymity.

The second banker said state-owned lenders had conducted internal studies showing they could manage easily despite losing the extra revenue from minimum balance levies.

Since June, public sector banks (PSBs) such as Canara Bank, Punjab National Bank, Indian Bank, Bank of Baroda, and Bank of India have dropped charges for not maintaining a minimum average balance (MAB) in savings accounts, five years after India's largest lender, State Bank of India (SBI), did so.

The step is also aimed at attracting a steady stream of depositors, thereby adding to the savings deposit base, said the two bankers.

"We want more people to open accounts with us since there is no pressure to keep a minimum amount of funds in the account," said the second banker.