Former Finance Minister P Chidambaram expressed his delight over the decision by major Indian banks to waive the minimum balance requirement for savings accounts. He stated that by imposing penalties for not maintaining the minimum balance, banks had made billions. However, the recent decision to lift this requirement is seen as a positive move, addressing longstanding grievances of account holders.
Chidambaram highlighted that over the past few years, savings account holders have repeatedly appealed against the mandate enforced by the government to maintain a 'minimum balance.' Despite the validity of their grievances, banks largely turned a deaf ear. Failure to meet the required balance often resulted in penalties, and this rule allowed some banks to accumulate significant profits.
The former minister hailed the decision to abolish this obligation, noting it as a significant transformation. Esteemed institutions like the State Bank of India (SBI) initiated this shift in 2020, with other public sector banks like Canara Bank following suit earlier this year, eliminating the minimum balance requirement.
Multiple Banks Eliminate Minimum Balance Penalties
Several banks have agreed to reduce or completely remove the penalties associated with not maintaining a minimum balance. This action responds to the growing dissatisfaction among customers burdened by such fees. It can also be interpreted as a strategic move to enhance customer satisfaction and loyalty. Historically, maintaining an average balance was standard for savings accounts across banks.
Chidambaram Declares: Banks Have Surrendered to Pressure
Evidently, these changes are taking place amid mounting pressure from customers and shifting market dynamics, compelling banks to reassess their policies. Chidambaram remarked that at least five banks have opted to waive the minimum balance rule, acknowledging that what reason could not achieve, economics has accomplished!
This change is set to alleviate the financial burden on customers and position banks as more consumption-oriented entities, thereby enhancing their reputation and market standing.
