Business News: RBI Directs Banks Not to Charge Minimum Balance Penalty But Here’s The Condition

Bank News: The Reserve Bank of India (RBI) recently issued a circular to banks and asked them not to charge any penalty on accounts that are no longer active. According to the RBI, banks are not allowed to charge customers for not keeping a minimum balance on inactive accounts that haven’t had a transaction for more than two years. Furthermore, even if an account hasn’t been used for more than two years, banks are not allowed to declare it inactive if it was opened to receive direct benefit transfers or scholarship funds. The new rule will come into effect from April 1, 2024. 

What is Minimum Balance?

The new regulation requires banks to notify customers via email, SMS, or letters when their accounts become inactive. Banks are permitted to contact the account holder’s nominee if the owner of an inactive account does not reply. It is convenient to have a savings account at a bank, but it is necessary to keep up its monthly average balance (MAB). Depending on whether you live in an urban, rural, or metro area, different banks have minimum balance requirements for savings accounts that range from Rs 2,000 to Rs 10,000. If an individual does not keep the required monthly average balance, the bank may impose a penalty of up to Rs 500.