Reena Dhiman, 32, who was in need of funds, was talking about repaying some of her old mutual fund investments. But she got a rude shock when her bank deducted the whole amount for the failure to meet minimum balance charges. In reality, it showed a negative balance to her account. Reena had made lump sum mutual fund investments with HDFC Bank from her old salary account which she did not run afterward. It has been about four years after she left her work and in December 2016 the account was transformed into a savings account because no income was added to the account. Reena isn’t alone. In the current situation where many people are facing a cash shortage due to the COVID-19 crisis, there are many people who complain on social media about banks charging for non-maintenance of minimum balance penalty.
Finance minister Nirmala Sitharaman also had instructed banks not to charge minimum balance charges for non-maintenance until 30 June. The time limit is over but in the case of Reena, charges were deducted by the bank in June. Regardless of the non-maintenance of minimum balance payments, the balance in a savings bank account cannot be negative, as per the notification from Reserve Bank of India released in November 2014. “It should be ensured that the balance in the savings account is not converted into a negative balance solely due to the levy of minimum balance non-maintenance charges,” the RBI notification said.
Reena approached HDFC Bank and she was partially reimbursed for her money and was told by mail that if she continues to maintain the minimum balance, the remaining deducted charges would also be reimbursed. There are many individuals who are charged regularly in their savings accounts for the non-maintenance of minimum balance. In response to a question in Lok Sabha, the finance ministry reported in July 2019 that over the past three years, 18 public sector banks and four private banks have charged about ₹10,000 crores as a penalty for the non-maintenance of the minimum balance. The average monthly balance (AMB) requirement for HDFC in urban branch accounts is ₹10,000, and ₹5,000 for semi-urban branches.
Therefore it would be better to close the bank account that you are not operating or do not have the minimum required balance. Banks don’t have the authority to charge a penalty for inoperative accounts in which no transaction has taken place for two years as per the circular issued by RBI on 1st July 2014. So if the bank takes any charge for the inoperative accounts, the customer can claim it back anyway.
