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Reserve Bank of India revises minimum balance norms for Bank Accounts


November 21, 2014

The Reserve Bank of India (RBI) has placed curbs on the charges imposed by banks for not maintaining minimum balance by the account holders. As per the new norms banks needs to notify the customer by SMS, email or letter about the intention to apply penal charges if minimum balance is not restored within a month. Banks have also been barred from the practice of having negative balances in accounts due to imposition of penal charges.

As per the the new norms, the board of directors of a bank has to approve the penal charges proposed to be levied for non-maintenance of minimum balance. "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," RBI said in a circular to all banks.


The board of directors has been given the freedom to fix charges, but RBI has said that penal charges must be reasonable and not out of line with the average cost of providing the services. The new charges come into effect from April 2015. Until then, banks have been asked to update their customer's mobile number and email details.

Earlier, RBI had proposed that banks should not take undue advantage of customer difficulty or inattention and 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. However, following a representation by banks, the RBI has revised its approach.



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