Levy of penal charges on non-maintenance of minimum balances in savings bank accounts

Friends   Reserve Bank of India has notified on 20.11.14 that bank can charge for non-maintenance of minimum balances in Saving Bank Accounts which will be applicable w.e.f. 01-04-2015 with some conditions.  Details notification is given below :-

RBI/2014-15/308
DBR.Dir.BC.No.47/13.03.00/2014-15

November 20, 2014

All Scheduled Commercial Banks
(Excluding RRBs)

Dear Sir/Madam

Levy of penal charges on non-maintenance of minimum balances in savings bank accounts

Please refer to our circular DBOD.Dir.BC.53/13.10.00/2002-03 dated December 26, 2002 on ‘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.

2. In this connection, a reference is invited to paragraph 30 of Part B of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection. One of the proposals contained therein was 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. A reference is also invited to the recommendations of Damodaran Committee on customer service in banks which, inter-alia, recommended that ‘banks should inform the customer immediately on the balance in the account breaching minimum balance and the applicable penal charges for not maintaining the balance by SMS/Email/letter. Further, the penal charges levied should be in proportion to the shortfall observed’.

3. The policy announcement has been reviewed after extensive consultation with banks. Consequent to these deliberations and after taking into consideration the recommendation of Damodaran Committee, it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, banks shall adhere to the additional guidelines given in Annex. The guidelines come into effect from April 1, 2015.

4. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank’s website.

5. 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.

Yours faithfully

(Lily Vadera)
Chief General Manager

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Annex

Levy of charges for non-maintenance of minimum balance in savings bank account shall be subject to the following additional guidelines:

(i) 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.

(ii) 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.

(iii) The policy on penal charges to be so levied may be decided with the approval of Board of the bank.

(iv) 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.

(v) It should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services.

(vi) It should be ensured 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.

No Penalty in Banks on prepayment of Home Loans

MUMBAI: In a relief to borrowers, the RBI today asked banks to immediately stop charging penalty on pre-payment of home loans taken on floating interest rates. 

"It has...been decided that banks will not be permitted to charge foreclosure charges\pre-payment penalities on home loans on floating interest rate basis, with immediate effect," the Reserve Bank said in a communication to banks.

Validity of Cheque/Draft/Pay orders/Banker's Cheques changed to 3 (three) months instead of 6 (Six) months

               Reserve Bank of India has changed validity of Cheque/Drafts/Pay orders/Bankers Cheque from 6 months to 3 months vide their notification no RBI/2011-12/251 DBOD AML BC.No.47/14.01.001/2011-12 dated 4th November 2011. Still it is notification to implement to those instructions those have been issued on or after w.e.f. 01-April-2012.   It means validity of instrument of three months will be effected w.e.f. 01.04.2012.  Detailed notification is given as under : -

RBI/2011-12/251
DBOD.AML BC.No.47/14.01.001/2011-12                November 4, 2011




The Chairmen/Chief Executive Officers
All Scheduled Commercial Banks (excluding RRBs)/Local Area Banks

Dear Sir,

Payment of Cheques/Drafts/Pay Orders/Banker’s Cheques

In India, it has been the usual practice among bankers to make payment of only such cheques and drafts as are presented for payment within a period of six months from the date of the instrument.

2. It has been brought to the notice of Reserve Bank by Government of India that some persons are taking undue advantage of the said practice of banks of making payment of cheques/drafts/pay orders/banker’s cheques presented within a period of six months from the date of the instrument as these instruments are being circulated in the market like cash for six months. Reserve Bank is satisfied that in public interest and in the interest of banking policy it is necessary to reduce the period within which cheques/drafts/pay orders/banker’s cheques are presented for payment from six months to three months from the date of such instrument. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, Reserve Bank hereby directs that with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.

3. Banks should ensure strict compliance of these directions and notify the holders of such instruments of the change in practice by printing or stamping on the cheque leaves, drafts, pay orders and banker’s cheques issued on or after April 1, 2012, by issuing suitable instruction for presentment within the period of three months from the date of the instrument.

4. Please acknowledge receipt

Yours faithfully,

(Deepak Singhal)
Chief General Manager in-Charge

Issue of Bank Demand Draft worth Rs. 20000 and above

At present, in general not only a particular bank but also all banks issue demand draft without mentioning Account Payee on Demand Draft worth Rs. 20,000/- and above. To avoid cash dealing for heavy amount etc. Reserve Bank of India has issued notification regarding necessity of Account Payee Crossing on Demand Drafts while crediting Payee's Account and also instructed through this notification that no cash payment will be made of Bearing Drafts on Bank Cash Counters.  To clarify in detail, complete notification issued by Reserve Bank of India is given as under : -

Notification

RBI/2011-12/250
DBOD.BP.BC. No. 49/21.01.001/2011-12

November 4, 2011

The Chairmen / Chief Executives of
All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir,

Issue of Demand Drafts for Rs. 20,000/- and above

As banks are aware, instruments with account payee crossing are required to be credited to the payee's account and not paid in cash over the counter. However, some unscrupulous elements use demand drafts without any crossing for transfer of money as an alternative to settlement through cash.

2. In order to address the regulatory concerns that have arisen in this context, banks are advised to ensure that demand drafts of Rs. 20,000/- and above are issued invariably with account payee crossing.

Yours faithfully,

(Deepak Singhal)
Chief General Manager -In - Charge.

Limits and Bank Charges in State Bank of India.

Friends,  It has already been explained that preparation of DD through internet banking is just like free in SBI.  Not only Demand Draft State Bank of India provides many facilities to their customers through internet banking.  A view on bank charges charged by State Bank of India  is detailed given below :-

• Charges/Limits shown below are subject to change and bank may change it without prior notice.
• Per day limit includes standing instructions/ scheduled transactions fro the day as also the bank charges pertaining to the transactions, wherever applicable

                                          Min.Transaction        Max. Transaction                   Bank Charges

                                            Amount (Rs.)          Amount (Rs.) Per Day                     (Rs.)

Transfer to own account	Re 1/-	10,00,000/-	NIL
Creation of e - TDR/ e - STDR	1,000/-	10,00,000/-	NIL
Creation of e - RD (Monthly instalment)	100/-	10,00,000/-	NIL
Transfer to other account in SBI	Re 1/-	5,00,000/-	NIL
Transfer to PPF (max 12 transactions per annum)	500/-	70,000/-	NIL
State Bank Group Transfer (SBGRPT)	Re 1/-	5,00,000/-	NIL
Inter Bank Transfer (NEFT)	Re 1/-	1,00,000/-	Rs.5 per Transaction
Inter Bank Transfer (NEFT)	Above Rs. 1,00,000/-	2,00,000/-	Rs.15 per Transaction
Inter Bank Transfer (NEFT)	Above Rs. 2,00,000/-	5,00,000/-	Rs.25 per Transaction
Inter Bank Transfer (RTGS)	Rs.2,00,000/-	5,00,000/-	Rs.25 per Transaction
Transfer through Credit Card (VISA) Bill pay	Re 1/-	25,000/- Per Transaction(Per day Max. Rs.50,000/-)	Rs.15 per Transaction
Draft Issue	Re 1/-	10,000/-	NIL
Draft Issue	Above Rs.10,000/-	1,00,000/-	Rs. 50 per Transaction
Draft Issue	Above Rs. 1,00,000/-	5,00,000/-	Rs. 100 per Transaction
IRCTC Transactions	Re 1/-	5,00,000/-	Rs. 10 per Transaction
Merchant Transaction	Re 1/-	5,00,000/-	NIL
i-collect ( wherever applicable)	Re 1/-	1,00,000/-	Rs.10 per Transaction
i-collect ( wherever applicable)	Above Rs. 1,00,000/-	5,00,000/-	Rs.20 per Transaction
Stop payment of cheques	One cheque leaf	No limit	Rs. 50 per leaf (Max Rs. 200)
No. of active Gift Card at a time	1 Card	10 Cards	Waived till 31-03-2012
Gift Card Topup	500/-	50,000/-	NIL
Contribution to New Pension System	For Tier-1 : Rs 500 For Tier-2 : Rs 250	5,00,000/-	NIL
OLTAS (Income Tax etc.) and Service tax	Re 1/-	10 Lacs (Can be increased to Rs. 2 Crore)	NIL
Other Taxes (State Govt. taxes, Customs Duty etc)	Re 1/-	10,00,000/-	NIL
Bill payment	Re 1/-	5,00,000/-	NIL
IPO (Retail Investors)	Re 1/-	2,00,000/-	NIL
IPO (HNI)	Above 2,00,000/-	1 Crore	NIL
DMAT (Lien marking)	Re 1/-	1 Crore	NIL
Donation	Re 1/-	5,00,000/-	NIL

Service Charges and Fees of State Bank of India w.e.f. 11.02.2008

Friends,  To know regarding service charges or Fees of State Bank of  India w.e.f. 11.022008, below table with complete details is given. Charges for Collection of Cheques are available w.e.f. 11.10.2008.  Charges for Outstation Cheque Collection and Cheque Collection under Speed Clearing System (by collecting bank from the customers)  are also available w.e.f. 01.04.2011

Sr. No.	Item	(Uniform to all Branches)
		Core/Non-Core Banking Branches Regular Branches other than P-Segment irrespective of Location (w.e.f. 11th Feb. 2008)
1.	Issue of MICR cheque-SB	Rs 2.00 per cheque leaf and 25 leaves free in a year ( Other than Multi city cheque Book)
2.	Issue of non-MICR cheque- SB	Rs 2.00 per cheque leaf and 25 leaves free in a year( Other than Multi city cheque Book)
3.	Issue of MICR cheque- CA	Rs 2.00 per cheque leaf other conditions to remain
4.	Issue of non MICR cheque- CA	Rs 2.00 per cheque leaf other conditions to remain
5.	Issue of Pass book/Balance certificate	Issue of Passbook/statement -NIL Issue of Balance certificate Rs 100/-
6.	Duplicate pass book/ Statement	With latest balance Rs.100/- (Rs.100/-per ledger folio (40 entries) for previous entries) additional
7.	Stop payment instructions	Rs.50/- per instrument up to 3 leaves. Range of cheques- Rs.200/-
8.	Balance enquiry	NIL
9.	Account closure before 12 months (a/c transfer not included)	Individuals- Rs.150/- Companies Rs. 500/-
10.	Cheque returned charges- cheques drawn on us.	Rs.75/ + other bank charges if any
11.	Cheques/ bills deposited returned unpaid- Local	Rs.75/ + other bank charges if any
12.	Signature verification	Rs.50/
13.	No dues certificate	Priority sector Nil Others Rs 100/- per certificate
	Remittance Facility
14.	Issue of demand drafts	Up to 10,000/- Rs. 30/- Above Rs10,000/- Rs.2.50 per Rs 1,000 Min. Rs. 50/- Max. Rs 12500/- For remittances by cash deposit, cash handling charges will be extra
15.	Revalidation/ cancellation of drafts	Rs.100/
16.	Issuance of duplicate demand draft	Rs 100/- per draft
17.	Issue of Banker's cheque	Up to 10,000/- Rs. 30/- Above Rs10,000/- Rs.2.50 per Rs1,000 Min. Rs. 50/- Max. Rs 12500/- For remittances by cash deposit, cash handling charges will be extra
18.	Revalidation/ cancellation of Bankers' cheque	Rs.100/
19.	Issue of duplicate bankers cheque	Rs 100/-
20.	Issue of TT	Same as draft charges+ transmission charges Rs 100/-
21.	Cancellation of TT	N.A.
22.	Collection of cheques (W.E.F. 11.10.2008)	a Upto Rs. 10,000 Rs. 50 per instrument b Rs. 10,000 to Rs. 1,00,000 Rs. 100 per instrument c Rs. 1,00,001 and above Rs. 150 per instrument 1. Above charges are all inclusive. (No courier charges, out of pocket expenses) 2. These charges are applicable only to transactions originated and payable within India.
22 (a)	Outstation Cheque Collection (W.E.F. 01.04.2011) [Notice issued on 01.03.2011]	Revised service charges + Service tax additional Value (Rs) Service Charges for Savings a/c customer** (Rs) Service charges for Current a/c customers /other customers** (Rs) Upto and including 5,000/- 25 # 25 Above 5,000/- and upto and including 10,000/- 50 # 50 Above 10,000/- and upto and including 1,00,000/- 100 # 100 Above 1,00,000/- and upto 5,00,000/- 200 200 Above 5,00,000/- and upto 10,00,000/- 225 225 Above 10,00,000/- 250 250 #   mandated by RBI. ** All inclusive maximum amount chargeable by banks to the customer + service tax as applicable.
22 (b)	Cheque Collection under Speed Clearing System (by collecting bank from the customers) (W.E.F. 01.04.2011) [Notice issued on 01.03.2011]	Revised service charges + Service Tax additional Value(Rs) Service Charges for Savings a/c customer* (Rs) Service charges for Current a/c customers/other customers * (Rs) Upto and including 1,00,000/- Nil 20 Above 1,00,000/- and  upto 5,00,000/- 175 175 Above 5,00,000/- and  upto 10,00,000/- 200 200 Above 10,00,000 lacs. 225 225 * Service Tax as applicable.

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