Bank Charges: Penalising The Poor Continues, As Corporates Enjoy Rs. 6 Lakh Crore Write-Offs

Public Statement | 27.11.2019

New Delhi: The public sector banks collected just under Rs 2000 crore in 2018-19 as a penalty for not maintaining the minimum balance in savings bank accounts. This was revealed by the Minister of State for Finance, Mr. Anurag Thakur in the Lok Sabha on Monday (Nov 25). In another reply to a question in the Rajya Sabha in January this year, the Government had said that between 2014 and 2018 Rs. 12,388 crores were collected by public sector banks and 3 private banks. Together, it is a whopping Rs. 14,000 crores, which are collected as a penalty in the past five years.

Financial Accountability Network – India (FAN India) expresses its utmost concern at this, for this is not less than penalizing the poor, pensioners, students, daily wage workers who are unable to maintain a minimum balance in their accounts, after being pushed into the banking system by the Government. That this is happening at a time when the economy is at its worst, when retrenchment and unemployment is very high, small scale manufacturers and unorganized sector are yet to recover from the twin attack of demonetization and imposition of GST, core sectors are showing negative growth and rising food prices is a poor joke on the people who struggle to meet their ends.

FAN India reiterates its demand that the bank charges that are hurting the poor most should be withdrawn.

The penalty for not maintaining minimum balance is an additional tax on the economically weaker section for being poor. The problems of NPAs have plagued the public sector banks in the recent past, so much that they have been pushed into a crisis. Yet, there has not been any concrete step to recover the bad loans or take actions against the willful defaulters. Instead, the Government and the RBI had used write-offs and ‘haircuts’ to clear the books. To add to this colossal waste of public money, the banks are now charging the people for every banking transaction to mitigate the losses. 

In the latest available data reveals that Scheduled Commercial Banks together have written off around 6,00,769 cr. in last 5 years of which SBI alone has written off around 2,67,263 cr. i.e. 44.48% while in one single year 2018-19 around 35% amount is written off.

The banks run with the deposits of its customers, to invest and gain its profits should not levy charges on depositors. The penalty for not maintaining minimum balance is one of the most brutal amongst them. The penalty for not maintaining minimum balance and the amount of money which is to be maintained on monthly or quarterly basis, both have raised significantly in last few years. This directly punishes those who are not even in the position to maintain a minimum balance. 

It is high time that the bankers realize that this will only affect the banks more adversely as those people who are losing money due to penalty for not maintaining minimum balance will be forced to remove their deposits from the banks. There was a similar reaction, when the public felt threatened that they might lose their deposits due to the notorious ‘bail-in’ clause by the now withdrawn FRDI Bill. Let us not forget that the strength of the PSBs is the trust that they enjoy with the public and the continuous harassment in the name of charges and fines are only going to alienate the public from the banks. 

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Ashish Kajla: 96501 64543
Shivani Dwivedi: 95848 21681


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