Giving some respite to the aam admi, in otherwise a bland policy, the RBI Governor Raghuram Rajan on Tuesday advised banks not to punish thier customers for non-maintenance of a minimum balance.
Former Finance Secretary and HDFC chairman CM Vasudev told The Pioneer:” It is a considerable issue, however, the regulatory decision should be left to the banks.” This comes as a positive development in the aftermath of Rajan’s advise that banks should not penalize customers.
Following the announcements many bankers had expressed displeasure and even said that in such a situation they would start imposing transaction charges on customers for providing cheque leaves as well the number of withdrawls. However, Vasduev added:” however, it should be left to the market forces as there is already high competetion amongst the banks.”
Many private banks including ICICI Bank and HDFC Bank charge Rs750 per quarter if their savings banks account holders do not maintain a minimum average quarterly balance of Rs10,000 in urban centres and Rs5,000 in semi-urban areas. However, State Bank of India does not levy any charge for non-maintenance of a minimum balance in basic savings account.
RBI move comes as a part of a consumer protection initiative, wherein the RBI has asked banks not to levy penal charges on customers who don’t maintain a minimum balance in basic savings bank accounts.”Banks should also not take undue advantage of customer difficulty or inattention,” said Rajan.
“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,” Rajan said.
Banks should also not levy penal charges if the minimum balance is not kept in any inoperative account, he added. The liability of customers should be limited in electronic banking transactions in cases where banks are not able to prove customer negligence, he added.
Highlighting that consumer protection is an integral aspect of financial inclusion, Rajan said the RBI proposes to frame comprehensive consumer protection regulations based on domestic experiences and global best practices.
“In the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty,” he added.