At a time when depositors are worried about the safety of their hard-earned savings deposited with banks, public sector lender State Bank of India (SBI) said it will waive the maintenance of average monthly balance (AMB) for all its savings accounts.
In a statement, which did specify the effective date of the waiver, SBI said the move will help it offer a hassle-free banking experience, which will further boost financial inclusion in the country.
“Waiving AMB is SBI’s yet another initiative to provide customers a more convenience and elated banking experience,” Rajnish Kumar, chairman, SBI, said while announcing the waiver. “We believe this initiative would empower our customers towards banking with SBI and boost their confidence in SBI,” he added.
SBI had revised its service charges in October, last year. In the previous scheme of things, the AMB was applicable according to the geographic location of the saving account holders. Account-holders in metropolitan and urban locations were required to maintain an AMB of ₹3,000, while those in semi-urban and rural locations were required to maintain respective AMBs of ₹2,000 and ₹1,000.
Non-maintenance of AMB attracted fines in the range of ₹10 to ₹15 plus goods and service tax (GST) for account holders in metropolitan and urban branches.
In the case of semi-urban branches, the fines ranged from ₹7.5 to ₹12 plus GST. While, those in rural branches, had to pay fines of ₹5 to ₹10 plus GST.
SBI’s also waived off its SMS alert charges, which were ₹12 (inclusive of GST) per quarter for debit cardholders who maintained an average quarterly balance of ₹25,000 and lesser. These did not apply to salary accounts.
While the move on waiving non-maintenance charges and making all accounts zero balance is beneficial to SBI’s customers, there is a price attached to it. The bank said that it has rationalised interest rates on saving accounts to a flat 3% per annum.
The bank used to pay an interest of 3.25% per annum to all saving accounts with deposits up to ₹1 lakh. For those with more than ₹1 lakh in deposits, the interest was paid in slabs—the balance up to ₹1 lakh attracted interest at 3.25% per annum, the balance above ₹1 lakh was offered 3%.
In the light of SBI’s current move, a look at SBI’s annual report for FY19, reveals that the bank’s standalone deposits stood at over ₹1.09 lakh crore. At the blanket rate of 3%, the interest outgo for the bank would have run into ₹32,752.6 crore in FY19.