Minimum balance: SBI rakes it big with an extra Rs 2,433 cr in 2017-18

India’s largest lender bank, the State Bank of India (SBI), made an extra 2433.87 crores in the financial year of 2017-18, by charging its customers for not maintaining the minimum balance, according to the details provided in Lok Sabha on 3 August by Shiv Pratap Shukla, the minister of state in Finance Ministry. The statistic notes that the “monthly average balance requirement was charged by SBI until 2012”. It stopped doing so until March 31, 2016, and reintroduced it in the subsequent year to eventually gain 2433.87 crores. SBI clocked a massive net loss of Rs 7,718 crores in the fourth quarter of 2017-18. In the same period of the previous year, it made profit of Rs 2,815 crores. The development can be attributed to rising bad loans from influential wilful defaulters, as the percentage of bad loans in 2017-18 increased to 10.91 percent of the total loans from 6.9 percent in 2016-17, according to newspaper reports. [caption id=“attachment_4393467” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] While Narendra Modi’s accusation of having inherited the NPA crisis from UPA times is by and large accurate, it is also important to note that the NPAs stood at 3.8 percent of the total loans in 2013-14, whereas it nearly doubled to 7.5 percent by 2015-16, according to an NDTV report. Devidas Tuljapurkar, joint secretary of the All India Employees Bank Association, said the banks are trying to cover up their losses due to rising NPAs by taking an easy way out of charging customers for failing to maintain minimum balance. “On the one hand, the government says it wants more people to get into the formal banking system,” he said. “On the other, banks discourage them by charging for not maintaining a certain balance. This is nothing but a cascading effect of rising bad loans.” According to details provided by Shukla, the major private and public sector banks have collected more than Rs 11,500 crores from their customers in the past four years. The three private sector banks of Axis, HDFC and ICICI have collected around 40 per cent of the total sum. 21 public sector banks ransacked the remaining amount. Shukla’s answer included the mention of the RBI’s master circular of 1 July 2015 on Customer Service in Banks, which allows the banks to “fix service charges on various services rendered by them”. But the charges should be “reasonable and not out of line”. Various banks levy charges accordingly. The SBI customers, for example, are bound to maintain a monthly balance of Rs 3,000 in urban branches, and Rs 2,000 in rural ones. Failing to do so can cost customers between 5 to 15 rupees, excluding Goods and Services Tax (GST). Even though the basic savings accounts, including zero balance accounts of Jan Dhan Yojana, are exempt from such charges, Tuljapurkar said it is another example of the working lower middle class paying for the ultra-rich, as they are the ones defaulting on loans. “The Rs 11,500 crores are obviously recovered from customers who belong to the salaried, lower middle class,” he said. “Who would struggle to maintain minimum balance? Certainly not the rich and elite.”