Not in regulatory domain of RBI: Governor Sanjay Malhotra on minimum balance for savings accounts

RBI Governor Sanjay Malhotra

Banks are free to decide the minimum balance for savings accounts and that it does not fall under the regulatory domain of the RBI, said Reserve Bank of India Governor Sanjay Malhotra on Monday. The RBI Governor was speaking to mediapersons on the sidelines of a function on ’Financial Inclusion Saturation Drive’ organized at Gozaria village panchayat in Gujarat’s Mehsana district.

Asked about a private bank increasing the minimum balance required for savings accounts, Malhotra said, "The RBI has left it to individual banks to decide on what minimum balance they want to set. Some banks have kept it at Rs 10,000, some have kept Rs 2,000 and some have exempted (customers). It is not in the regulatory domain (of RBI), ” as reported by news agency PTI.

ICICI Bank has recently raised the minimum balance requirement for new savings accounts opened from August 1, increasing it fivefold.

For regular savings accounts, the minimum average monthly balance (MAB) has gone up from Rs 10,000 to Rs 50,000. In semi-urban branches, the MAB has been increased to Rs 25,000, while in rural branches it now stands at Rs 10,000. In contrast, the State Bank of India has announced it will not penalise savings account holders for failing to maintain a minimum balance.

Public sector banks generally have lower balance requirements than private lenders, with Jan Dhan accounts exempt from such norms. Many public sector banks have already removed minimum balance conditions altogether, ensuring customers face no penalty for non-maintenance. Speaking at the event, Malhotra said digital literacy was very important to succeed in the new age.”Earlier they used to say if you do not study you will not prosper.

In today’s age, this is the same for digital literacy. If you do not have digital literacy you will not progress,” he said.All decisions that are taken must ensure it benefits the last person in society, the RBI governor asserted. The Pradhan Mantri Jan Dhan scheme was started with the same goal some 10 or 11 years ago so that everybody could get access to banking services, he said.”But opening an account is just the beginning, a door has been opened.

The government has started various schemes like accident insurance, life insurance and Atal pension scheme. I urge everyone to take benefit of these. To get proper banking service is your right,” he said.Bank of Baroda managing director and chief executive officer CEO Debadatta Chand, speaking at the event, emphasised the importance of regularly updating ’Know Your Customer’ (KYC) details for Jan Dhan accounts to ensure they remain functional.

*With Agency Inputs