NO PENALTY BE LEVIED FOR VIOLATING MINIMUM BALANCE NORM

As part of a consumer protection initiative, the Reserve Bank today asked banks not to levy penal charges on customers who don't maintain a minimum balance in basic savings bank accounts. "Banks should also not take undue advantage of customer difficulty or inattention," RBI Governor Raghuram Rajan said while releasing the first bi-monthly monetary policy statement for 2014-15. "Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to basic savings bank deposit accounts and restore the services when the balances improve to the minimum required level," he said. Banks should also not levy penal charges if the minimum balance is not kept in any inoperative account, he added. State Bank of India does not levy any charge for non-maintenance of a minimum balance in basic savings account. Customers of ICICI Bank and HDFC Bank are charged Rs 750 per quarter if they don't maintain a minimum average quarterly balance of Rs 10,000 in urban centres and Rs 5,000 in semi-urban areas. The liability of customers should be limited in electronic banking transactions in cases where banks are not able to prove customer negligence, he added. Highlighting that consumer protection is an integral aspect of financial inclusion, Rajan said the RBI proposes to frame comprehensive consumer protection regulations based on domestic experiences and global best practices. "In the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty," he added.