The Reserve Bank of India has asked banks to inform their customers about a fall in minimum balance well in advance. The apex bank has also directed that penal charges should be levied only to the extent of shortfall in such balances. The guidelines with respect to levying of penal charges for non-maintenance of minimum balance will be effective from April 1, 2015. According to the detailed guidelines, RBI said, penal 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. It asked the banks in the event of a default in maintenance of minimum balance, the bank should notify the customer clearly by SMS or email or letter, giving them the time of one month to restore the balance so as to avoid penal charges. 

It further stated that 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. The Central bank has also directed all banks to ensure that such penal charges are reasonable and not out of line with the average cost of providing the services. Also, the banks should ensure 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. The apex bank also asked all banks to take immediate steps to update customer information so as to facilitate sending alerts through SMS or emails for effective implementation of the guidelines. The RBI guidelines are part of the RBI first bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014 regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection.