National Bank of Punjab raises minimum balance to Rs 10,000 for metropolitan customers

The state-run Punjab National Bank (PNB) has decided to raise the minimum quarterly average balance (QAB) to Rs 10,000 in the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. The public sector bank (PSB) has also decided to increase the prices of various services by up to 50% as of January 15, 2022. It is interesting to note that the table below shows that the Bank uses the terms “minimum balance” and “average quarterly balance” almost interchangeably. If it has changed its rules to mean a ‘minimum’ balance, that means a metropolitan customer will be penalized if the balance falls below Rs 10,000 in a savings account even for a day.

With ICICI Bank announcing a large increase in credit card fees and penalties and PNB announcing a hike in other bank charges, it is only a matter of time before all other banks announce similar revisions. PNB’s advertised fees are high and are sure to see customers leaving the big banks for newer private banks or payment banks, which have lower fees or less onerous terms.

PNB also doubled the fees per quarter so as not to maintain a minimum balance in the accounts of all customers. For customers in rural and semi-urban areas, the (penalty) fee is increased from Rs 200 to Rs 400, while for urban and metropolitan areas, it would be Rs 600.

Previously, PNB customers from urban and metropolitan cities were grouped together and had to keep the QAB of Rs5,000.

The National Bank of Punjab has announced a 50% increase in its fees for revalidation or cancellation of drafts and other instruments from Rs100 to Rs150 per instrument. Similarly, the charge for returning outgoing checks or bills has been increased to Rs 150 per instrument from Rs 100 for the value of the instrument up to Rs 1 lakh. For values ​​above Rs 1 lakh, the charge is increased to Rs250 per instrument from Rs200.

While increasing the rental fee for medium sized lockers by Rs 1,000 for rural, semi-urban and urban and metropolitan areas, PNB has limited the number of free visits to 12 from 15 previously. After the 12 free visits, the customer will have to pay Rs100 per visit for each visit to the locker.

According to Pune-based activist Vivek Velankar, after failing to collect monies owed from defaulters, the Punjab National Bank appears to be trying to make money from all other customers. It says: “In response to my Right to Information (RTI) request, PNB says it has written off loans worth Rs46,125 crore from 148 large defaulters who owe more than Rs100 crore over the past five years till financial year (FY) 20-21. Of this amount, PNB could recover less than 10% or Rs4516 crore.

He adds that the notification issued by the PNB to unilaterally increase the charges is contrary to the circular issued by the Reserve Bank of India (RBI). “According to the RBI circular, banks cannot impose a fixed penalty for not maintaining QAB. It must be directly proportional to the size of QAB’s deficit and even before that, the bank is required to inform the customer of the deficit and impose criminal penalties only after giving the customer time to reinstate the QAB. So how can the PNB issue the circular that sets penalties for not maintaining QAB?” he asks.

The November 2014 circular issued by RBI instructs banks to notify their customers of lower minimum balances well in advance and to impose criminal penalties only to the extent of the shortfall in such balances.

(Source: RBI Circular of November 20, 2014)

In the event of failure to maintain a minimum balance, banks must give clear warning to customers by SMS, e-mail or letter giving them one month to restore the balance in order to avoid criminal penalties.

RBI says banks should not take unfair advantage of customer difficulties or inattention. “Instead of imposing criminal penalties for not maintaining the minimum balance in ordinary savings bank accounts, banks should limit the services available on these accounts to those available for savings bank deposit accounts of base and restore services when balances reach the required minimum level,” the circular states.

The central bank had also asked banks to ensure that the balance in the savings account does not turn into a negative balance solely due to the collection of fees for not maintaining the minimum balance.

In 2017, Moneylife Foundation submitted a memorandum on the unfair accusations levied on customers.

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