SBI Lowers Minimum Average Balance Requirement: 10 Points

SBI’s revision in minimum balance requirement will benefit 25 crore customers.

State Bank of India (SBI), the country’s largest public sector lender, said on Friday that it has reduced its average balance requirement in a move that will benefit 25 crore customers. SBI has also revised the charges for non-maintenance of minimum average balance (MAB) in savings accounts, besides allowing customers to now maintain a quarterly average balance (QAB) instead of a monthly average balance, the bank said in a statement.

Here are 10 things that you must know about SBI’s new average balance requirement:

1. Customers in the metro and urban centres will now have to maintain an average of Rs 1,000 during a quarter compared to Rs 3,000 average on a monthly basis earlier.

2. The requirement of quarterly average balance stands revised at Rs 500 instead of Rs 2,000 in semi-urban and Rs 1,000 in rural areas, SBI said in the statement.

3. The charges of non-maintenance of average balance in accounts will now be levied on a quarterly basis. For instance, the charges for non-maintenance of quarterly average balance in metro centres will now stand reduced up to Rs 50 per quarter instead of Rs 50 per month, the bank said.

4. The revised minimum average balance requirement and charges will become applicable from the quarter beginning January 2018.

Area Existing Monthly Average Balance Existing Charges  Revised Quarterly Average Balance Revised Charges 
(Per Month) (Per Quarter)
Metro Rs 3,000/- Rs 30/- to  Rs 1,000/- Rs 30/- to 
Urban Rs 3,000/- Rs 50/- plus GST Rs 1,000/- Rs 50/- plus GST
Semi-urban Rs 2,000/- Rs 20/- to Rs    500/- Rs 20/- to
Rs 40/- plus GST Rs 40/- plus GST

5. SBI has 41 crore savings bank accounts out of which 16 crore bank accounts that fall under Prime Minister’s Jan Dhan Yojna / basic savings bank deposit and of pensioner/minors/social security benefit holders were already exempted from minimum balance requirement. The above revision in minimum balance requirement will benefit 25 crore customers, it said.

6. SBI also clarified that customers always has the option of converting the regular savings bank accounts to basic savings bank deposit accounts, free of charge, in case he/she desires to avail the basic savings bank facilities without being subjected to maintenance of minimum average balance.

7. The move comes after SBI faced all-round flak for earning Rs 1,771.67 crore as charges for non-maintenance of monthly average balance in savings accounts in eight months of 2017-18. This is more than its second quarter net profit of Rs 1,581.55 crore and is also nearly half of Rs 3,586 crore SBI earned as net profit during the April-September period.

8. Effective October 1, 2017, SBI customers holding savings bank accounts in metro and urban branches were required to maintain a monthly average balance of Rs 3,000. Customers in semi-urban SBI branches were required to maintain a monthly average of Rs 2,000. Those holding SBI savings bank account in rural branches were required to keep a minimum monthly balance of Rs. 1,000.

9. SBI had recently said that on an average balance of Rs 3,000 in the metros, it earned only Rs 6 a month whereas for a minimum balance of Rs 1,000 in rural, it earned on Rs 2 per month which is meagre compared to the services it offered and the corresponding costs it incurred (free cheque books, 8 free ATM transactions, free branch transactions).

10. From October 1, 2017, SBI had earlier revised its minimum account balance criteria applicable to savings bank accounts. A penalty amount ranging from Rs 20 to Rs 50 (both amounts exclusive of GST or goods and services tax) was chargeable for non-maintenance of sufficient balance as per the bank’s minimum account balance rules.