SBI customers will no longer be penalised for not maintaining average monthly balance

• India’s largest bank has done away with the requirement of a minimum average monthly balance requirement for saving account holders.
• The State Bank of India (SBI) has also rationalised the interest rate on savings accounts to a flat 3% per year.
• The move comes at a time when SBI is looking to buy 49% stake in the troubled Yes Bank.

India’s largest bank, the State Bank of India (SBI), has waived off the requirement for depositors to maintain an average monthly balance in their accounts. It has also rationalised interest rate on savings bank accounts to a flat 3% per annum.

The move comes at a time when the government-owned bank is poised to buy 49% stake in Yes Bank as a part of the Reserve Bank of India’s (RBI) scheme to rescue the troubled private sector entity. When the RBI initially announced its plans, SBI’s stock saw the sharpest fall in over seven years.

The move to increase the liquidity of its depositors while also reigning its fund outflow could be a way to win back some faith with its 44.51 crore account holders.

No more minimum balance requirement for SBI customers
Before today, SBI customers had to maintain a monthly average depending on the branch they signed up with — urban, semi-urban or rural. The penalty charges also varied from branch to branch.


Source: SBI

If an account holder did not maintain his monthly balance requirement, he was charged a penalty of anywhere between ₹5 to ₹15 depending on the level of shortfall.

The rate of interest on saving deposits also varied with deposits up to ₹1 lakh subject to returns of 3.25% per year and deposits greater than ₹1 lakh seeing benefits of 3%. However, with the new regulation in place, all bank deposits will accrue a flat rate of 3% per annum.

See also:
India's largest bank stock sees the sharpest fall in over 7 years — investors want to say 'no' to Yes Bank