The State Bank of India (SBI) has decided to increase - by several times - the minimum balance required to maintain a savings account.
The monthly average balance (MAB) requirement has been increased to as high as Rs 5,000 for branches in six metros. The minimum balance is expected to be raised from April 1. The move will hit 31 crore depositors, including pensioners and students.
The benchmark for MAB and the penalties for not maintaining it are likely to be followed by other public sector banks.
In the meanwhile, the government has asked SBI to reconsider it's decision to raise the MAB, sources told PTI.
Savings bank account holders of SBI and its five associate banks (that are scheduled to merge with it April 1) will have to maintain this monthly balance or they will invite a penalty ranging from Rs 20 (rural branches) to Rs 100 (metro cities).
As of now, the MAB across the country for a savings bank account is Rs 500 without the facility of a cheque book and Rs 1,000 with a cheque book.
India's largest bank has now decided to fix separate MABs for 'metro', 'urban', 'semi-urban' and 'rural' areas from the beginning of April 1, that is, the next financial year.
MAB for metro branches will be Rs 5,000 and penalty for non-maintenance of minimum balance will be between Rs 50 and Rs 100. For urban and semi-urban branches, the MAB has been fixed at Rs 3,000 and Rs 2,000 respectively.
In case of rural branches, the minimum balance has been fixed at Rs 1,000. Breach of MAB will attract a penalty ranging between Rs 20 and Rs 50.
Five associates banks of SBI -- State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) -- will merge with the parent on April 1.
With the merger of all five associates, SBI is expected to become a lender of global proportions with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over $555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.