Mumbai, Nov 21 (KNN)  The Reserve Bank of India has asked banks to give prior notice to its customers about the levy of penal changes on non-maintenance of minimum balances in saving bank accounts adding that the charges levied should be directly proportionate to the extent of shortfall observed.

“The guidelines come into effect from April 1, 2015,” the apex bank said in a notification yesterday.

Levy of charges for non-maintenance of minimum balance in savings bank account shall be subject to certain additional guidelines, it said.   

“In the event of a default in maintenance of minimum balance/average minimum balance as agreed to between the bank and customer, the bank should notify the customer clearly by SMS/ email/ letter etc. that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable.

“In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder,” RBI said.

In addition, the policy on penal charges to be so levied may be decided with the approval of Board of the bank, it said.

Significantly, the penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized, it said.

Further, it should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services.

Banks should also ensure that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance.

The RBI has referred to its circular of December 2002 about ‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers, in a transparent manner, regarding the requirement of minimum balance in savings bank account and levy of penal charges for non-maintenance of the same at the time of opening the account.

It had also proposed certain measures towards consumer protection, one being that banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level, it said.

As far as these new guidelines are concerned, they should be brought to the notice of all customers apart from being disclosed on the bank’s website, the central bank said.
In the meantime, all banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs/emails etc) for effective implementation of the guidelines, it said.  (KNN/ES)