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No negative balances in savings accounts: RBI

Posted Date : 11-May-2016 , 08:33:29 am | Posted By CASANSAAR print Print
Negative balances in savings accounts due to penalty charges are now history following a directive from the central bank. The RBI has asked banks to stop imposing charges for non-maintenance of minimum balance once the balance in a savings account touches zero.

Although the norms came into effect last year, some banks were continuing with the practice of creating negative balances in savings accounts until recently. According to the RBI, if any bank continues to debit charges on a savings account creating a negative balance, customers can approach the banking ombudsman. Most banks contacted by TOI said that they do not create a negative balance in savings bank accounts.
 

Savings accounts usually go into negative balances when the customer changes his job and his 'salary account' ceases to receive funds. Most banks offer special facilities for salary accounts, waiving the minimum balance requirement. But when the customer quits his job, the account ceases to be a salary account and the bank begins to apply minimum balance requirements. Since there is no regular salary flowing in, The bank begins to debit a penalty for non-maintenance of minimum balance, which often results in the balance turning negative. Although banks do not pursue recovery of the amount due under negative balance accounts, the customer stands to lose if he deposits funds into the account.

In response to an email sent by TOI, HDFC Bank said it "does not allow the balance in a savings account to go negative due to imposition of charges for non-maintenance of minimum balance". The statement added that there are no charges for reactivation of the account in future. Axis Bank said that as a policy it does not accumulate charges for non-maintenance of balance. "In case the account has no balance and has no customer-induced transaction during the month of observation, service charge related to non-maintenance of balance is not applied, nor is any lien/negative balance created," the bank said in an emailed response to a query. An ICICI Bank spokesperson also said that it does not create negative balances in savings accounts.
 

The RBI had in 2014 revised its guidelines for banks imposing penal charges for non-maintenance of minimum balance in a savings bank account. Subsequently, with effect from April 1, 2015, it had asked banks not to take undue advantage of customer difficulty or inattention and to give an advance notice to the customer before deducting charges from their bank balance. It had asked banks to send notice either by SMS, email or a letter. However, some banks had continued to impose charges resulting in the balance in a savings account turning negative.#casansaar (Times of India)

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