Penalties close to Rs 5,000 crore was collected in 2017-18 by the banks from depositors for not maintaining minimum balance in their accounts. The scale of penalties has gone up despite banks opening 30.8 crore basic savings accounts for those who cannot afford to maintain minimum balance under the Jan Dhan Yojana scheme.
State Bank of India has topped the list with highest collection of Rs 2,433 crore, which nearly half of the total fines. Another 30% of the fines were raised by three large private lenders Axis Bank, HDFC Bank and ICICI Bank
The reason of double collection of penalties with SBI in FY18 is that the bank reintroduced fines in FY18 after several years. However, since April 2018 the minimum balance requirements were eased and so have penalties. This followed the backlash after reports in January 2018 that SBI had collected Rs 1,700 crore in seven months of FY18.
As a percentage of penalties to savings accounts, HDFC Bank, Axis Bank and Oriental Bank of Commerce have higher averages than SBI. Although banks do not divulge number of savings accounts, the debit cards issued by them (excluding JDY cards) is an indication of the number of regular savings accounts.
State minister of finance Shiv Pratap Shukla released the figures for fines in the Lok Sabha on Friday in response to a query.
According to Ashish K Das professor at Department of Mathematics in IIT Mumbai, a key flaw in the conditions imposed by banks is that the fines are not commensurate with the shortfall in deposits. So, depositors end up paying large penalties even when they miss the minimum balance requirement by a few rupees. This is not in keeping with the RBI directive that requires banks to ensure charges are reasonable and not out of line with the average cost of providing banking services.
Public sector banks are trying to increase fee collection to make up for losses from bad debts. PSBs collectively lost Rs 85,361 crore from non-performing assets in 2017-18. Even if SBI’s Rs 2,434 crore were to be excluded, there is an increase of Rs 400 crore in charges for violating the minimum balance rule since 2015-16 — the year of demonetisation. Although almost half the banks reduced their fines, the increase by other banks has more than made up the reductions. One reasons for this is public sector banks are trying to increase fee collection to make up for losses from bad debts. PSBs collectively lost Rs 85,361 crore from non-performing assets in 2017-18.